Saturday, July 12, 2008

Whose Take on the Economy do You believe?

Economists are evenly split between inflation and recession in the economy"Economic uncertainty" is turning into a 2008 buzzword and there's a lot of good reasons why.

On the one hand, there are precursors to inflation in the economy:

  • Rising oil costs
  • Rising food prices
  • Higher Cost of Living

On the other hand, there are precursors to recession in the economy, too:

  • Mounting job losses
  • Less access to credit and/or loans
  • Falling consumer confidence data

The pie chart at right illustrates just how uncertain the "experts" are about the state of the U.S. economy. They're evenly split, right down the middle.

This isn't good news or bad news for Americans, per se, but it does legitimize the idea that the economy's future direction is in doubt. This is one of the biggest reasons why there's been no clear direction for mortgage rates or stock markets since the start of the year, and that can impact the housing markets, too.

As the experts remain confused, so are the consumers, so spending becomes as limited as the confidence of the consumer.

Until the picture gets more clear, we can expect the volatility to continue.

(Image courtesy: Wall Street Journal)