Many economists predict that the economy will turn itself around in 2009, a major change is expected by mid year as many are optimistic now that the feds have drastically cut the fed rate, causing mortgage rates to fall at an all time low. With 30 yr fixed rates going to high 4% and the 5/1 Adjustable Rate Mortgage at mid 4%, home sales are expected to rise faster than ever and foreclosures are supposed to start going away.
This change in real estate is supposed to bring confidence back to the people and increase their spending habits, including their spending into the market causing the high variations in the S&P and the Dow to go away. This would then spread into the lending world, giving small banks a great chance to enhance their loan portfolios, over the big banks that the people lost faith in and consider risky. The auto industry is not supposed to turn itself around overnight but with the lending industry starting again, it will eventually come around. With the incentives and rebates starting, along with more efficient models getting released. The main factor that will remain engraved in the history of this economy is the fall of mega giant investment firm known as Lehman Brothers.
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