Economic News Story Streitfeld, David.

Economic News Story

Streitfeld, David. "U.S. Home Sales Drop 33% in May," 23 June, 2010. http://www.nytimes.com/2010/06/24/business/economy/24home.html?ref=business

The housing market in the United States currently has not been this bad since the government began tracking this data in 1963. The Census Bureau released a report June 23, 2010, stating that sale of U.S. homes had dropped 33% in May. Additionally, domestic unemployment rates remain high. This no doubt contributes to the drop in the housing market, given that if there are no jobs, no one will have the income to maintain a mortgage on a newly purchased home. One tactic homeowners have developed is to intentionally default on their mortgages because what they owe is an amount much greater than what the house is worth. Fannie Mae announced that such homeowners would be ineligible for a new Fannie Mae supported loan for 7 years, and that it would take legal action to recover outstanding mortgage debt from such defaulting borrowers. Overall, builders sold new homes in May at an annual rate of 300,000, a rate of 32.7% lower than the 446,000 rate in April. Correspondingly, sales are now even lower than the recession of the early 1980s. Subsequently, analysts and economists are becoming more discouraged about the domestic housing market.

2) Leonhardt, David. "When Caution Carries Risk," 22 June, 2010. http://www.nytimes.com/2010/06/23/business/economy/23leonhardt.html?ref=economy

The Chairman of the Federal Reserve, Ben Bernanke, claims that he and the Federal Reserve will be able to spur economic growth. Bernanke states that the Federal Reserve has considerable power to expand aggregate demand and economic activity. Yet, Bernanke believes that the U.S. economy is growing, but just not fast enough. The Chairman believes that our unemployment rate will remain high for subsequent years, putting many people under financial stress. However, Bernanke remains unwilling to use his power to lift economic growth and reduce unemployment. One reason for not wanting to take active steps to speeding up the U.S. economic growth is a worry that the financial markets are fragile. So, it seems that the Federal Reserve are simply willing to accept high unemployment rates for years to come, instead of risking a perhaps worse situation of market panic, a rise in long-term interest rates, and even higher unemployment.

3) Mulligan, Casey B. "Don't Fear Inflation, if it Comes," 23 June 2010. http://economix.blogs.nytimes.com/2010/06/23/dont-blame-the-next-inflation-on-politicians/?ref=economy