Portland Mortgage Broker

Former Federal Reserve chairman Alan Greenspan offered a bit of optimism about the housing market in an interview this week with David Wessel of the Wall Street Journal. Mr. Greenspan said that he expects housing prices to begin stabilizing in the first half of 2009, although they could continue to drift lower for quite some time thereafter.

The current economic turmoil is comparable to the early 1990s, which can be a valuable guide to understanding what’s next as the U.S. economy seeks to rebound into healthy growth, according to one Fed official on Thursday.

Minneapolis Fed President Gary Stern, a voter on the FOMC who is known to tilt towards the hawkish viewpoint, said the experience in the early 1990s would “imply a continuation of only modest expansion in the economy, the likelihood of further increases in unemployment for a time, and a diminution of inflation, absent a resurgence in energy and other commodity prices.”

Stern said U.S. consumers have been hit hard by rising energy and commodity prices, but the U.S. economy is fundamentally flexible and resilient, and inflation is expected to moderate in coming months.

Is anybody else amazed about the beating our economy has taken over the last year, yet it still refuses to step into a recession? We’ve been dealing with some record-high inflation numbers, house prices declining in some areas by 20% or more, and rising unemployment across the nation. We have the Fed arguing amongst themselves about whether hiking rates is a good idea or not, we have Wall Street freaking out daily over troubled earnings news and turbulent stock prices, and consumer sentiment at record lows. Yet, GDP continues to march on. Slowing, yes, but not dropping into recession territory. That’s the most remarkable thing in the world to me! We truly are a resilient and flexible economy at the most fundamental level.