US economy: Cheaper money driving auto-sales, hesitant Fed rate hike pace to keep the USD from rising too sharply



A walk down Wall Street was provided by John Eade, President of Argus Research, when he joined Zak Mir and Bill Hubard, Chief Economist for Bullion Capital, to discuss the automobile and housing markets in the US, with the consumer sector thriving.

Good holiday season for retailers and restaurants

Eade noted that the consumer sector was boosted by the higher than expected non-farm payroll number, with the jobs market also growing and unemployment down to 5%. He continued that this will be good for retailer and restaurants as we head towards Thanksgiving and Christmas.

Auto-market a turnaround story, not worrying about a housing bubble

Eade outlined that the auto-market is selling as many automobiles today as it did back in the boom period before the financial crisis, back up to around 18 million sales which he expressed to be due to cheap money. He added that this is good for both employment, consumers and the car manufacturers in the US. On the other hand, Eade believed that the housing market is a different story, and has not recovered like the auto-market, although it did bottom later in 2011. He commented that we have had 4 years of recovery but the housing market is not the same as it was in 2006. Nevertheless, he did note that homeowners are doing better and he is not worried about a US housing bubble.

Fed rate hike a go?

Eade finished on the US interest rate hike debate, and he highlighted that they will hike in December, but the future hikes will be at a hesitant pace in order to avoid the election year. He concluded that this slow pace would also avoid the USD spiking too high and thus halting the interest rate rising process.

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