Inflation up, housing down
February 28, 2005
The US Commerce Department has reported a strong increase of 0.3% in inflation, furthering speculation that quarter-percentile rises are to be expected in the coming months.
Although spending and income figures were in line with analyst predictions, a particular surprise was a downturn in the overall US housingmarket of almost 10%. This was against an expected rise of around 2.5%.
While there is no immediacy for corrective action as yet in the market data, and no rush for increasing lending rates, the fall in housing market has some observers concerned.
The property market has been a particular vehicle for economic growth over the past few years, and signs of declining property values could be indicative of declining economic strength.