Fed Says Stronger Housing Market to Spur Growth
Original article can be found here. Â Written by Steve Matthews â€“ Feb 5, 2013 9:49 AM CT
Federal Reserve Governor Elizabeth Duke said sheâ€™s upbeat about the outlook for theÂ U.S. economyÂ in part because of a rebound in housing, even after growth stalled during the fourth quarter.
â€śIâ€™m actually on the optimistic side,â€ť Duke said today in response to audience questions during a speech in Duluth, Georgia. â€śIf you look at the underlying thesis, the growth in consumer spending and some of the business growth, I think there is some momentum building, particularly in the area ofÂ housing.â€ť
Duke backed the Federal Open Market Committee decision last week to continue purchasing securities at the rate of $85 billion a month. The Fed said economic growth â€śpaused in recent months, in large part because of weather-related disruptions and other transitory factors,â€ť whileÂ â€śthe housing sector has shown further improvement.â€ť
The FOMC announced its decision on Jan. 30, the same day the Commerce Department said gross domestic product shrank at an annual rate of 0.1 percent during the fourth quarter as a plunge in defense spending swamped gains for consumers and businesses. Fed policy makers expect growth of 2.3 percent to 3 percent this year, according to their forecasts in December.
TheÂ housing reboundÂ will help ensure the lapse in growth proves to be temporary, Duke, a former community banker, said today.
â€śWe are seeing steadyÂ increases in house prices,â€ť she said. â€śWe are seeing improvements inÂ new residential construction and also in household formation, which is theÂ demand for houses.â€ť