Government Shutdown Exacerbates Decline Of US Housing Market - Wall Street Analyst
Umer Jamshaid Published January 16, 2019 | 06:15 AM
WASHINGTON (UrduPoint News / Sputnik - 16th January, 2019) The US government shutdown is hurting an already declining domestic housing market but the overall economic impact so far has been relatively minor, Wall Street analyst and Trends Research Institute head Gerald Celente told Sputnik.
Tuesday marked day 25 of the longest federal government shutdown in US history amid a political stalemate over border security funding that has no end in sight. The shutdown so far has cost the US economy around $3.6 billion, Standard & Poor's Chief US Economist Beth Ann Bovino said in a statement on Friday.
"Currently it [the shutdown] will... hit housing harder which is already on a down trend because of rising interest rates," Celente said. "Refinancing and new mortgage applications are already on a down trend. This will just make it a bit worse since January is also a very slow housing sales month."
The Federal Reserve increased the interest rate four times in 2018 and has signaled more are to come. On January 10, Fed Chair Jerome Powell said the central bank could afford to be "patient and flexible" amid the current government budget crisis.
In the short term, Powell said, government shutdowns typically do not leave much of a mark on the economy.
The shutdown, Celente added, also negatively affected January retail sales numbers along with businesses dependent on federally-assisted loans. The analyst also said, however, that the overall economic impact of the shutdown has been marginal.
"Overall, it is all temporary, unless it extends for another two or three weeks," Celente predicted. "Once the government opens it will be all back to 'abnormal.'"
As for the stock markets, Celente said there has been no real impact at this time.
"Earnings and the hope of less aggressive interest rate hikes are what are of most concern along with, of course, the slowing global economy and geopolitical concerns, especially in the middle East and Venezuela and whether military actions will drive up oil prices," Celente said.
The government shut down on December 22 after congressional Democrats refused to approve a spending bill that allocated $5.7 billion to build a wall on the southern border that President Donald Trump has demanded.
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