US housing stats knock back Obama’s hopes of a recovery

| April 16, 2009 | 0 Comments

US President Barack Obama suggested earlier this week that the US economy is seeing signs of progress.

However, his optimism may have been quashed after figures show that the number of US citizens losing their homes soared by 44% in March. Furthermore, a survey carried out by established that 175,199 homes were repossessed by lenders last month.

Recovery of the US housing market is crucial to the recovery of the world’s largest economy and the housing stats come despite major banks promising to help struggling homeowners. So far this year, nearly 370,000 families have lost their homes.

Further stats in the housing market show that mortgage applications also declined last week for the first time in over a month. The figures indicate that potential buyers are steering clear of the housing market despite record low borrowing costs.

US Federal Reserve chairman, Ben Bernanke, echoed Mr Obama’s comments and said the recession is easing.

However, figures yesterday revealed that the US economy continued to weaken in March, although at a much slower rate, according to the influential Beige Book, a publication released by the Federal Reserve.

The Beige Book, which is compiled eight times a year, is based on reports and comments from businesses throughout the US and said that the housing market remains “depressed overall”.

The Book, which is also used to establish interest rates in the US, said “overall economic activity contracted further or remained weak”.

Economic recovery in the US was also dampened after consumer prices were 0.4% lower last month than in March last year - the first year-on-year fall since August 1955 - primarily due to lower energy prices.

Many now believe deflation is a threat in the US which, according to economists would not be a disaster, but a long period of deflation would be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

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