S&P’s/Case-Shiller Plunge Complicates Fed Decesion
Jun 25th, 2008 | By Contrarian Profits | Category: Featured, Financial NewsThe US economy was hit by a double-whammy of ugly economic data yesterday.
S&P’s/Case-Shiller’s index of housing prices in 20 major US cities fell by a record 15.3% year-on-year in April, the steepest drop since the began collecting data in 2001.
All 20 cities covered reported a drop in prices. US housing prices have now dropped below their 2004 levels.
Worse still, a Harvard University study says the housing slump is a long way from over.
Meanwhile, the Conference Board’s consumer confidence index plunged to its lowest level for 16 years in June. As asset prices tumble at the same time as food and fuel bills skyrocket, American households are cutting back on spending.
All of this complicates matter further for the feds. Soaring inflation has put pressure on Bernanke & Co to hike rates, but that could strangle the economy — and especially the housing sector — further.
Economists surveyed by Bloomberg unanimously expect rates to remain on hold tomorrow.
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