Wednesday, December 19, 2012

Interest rate trends

Calculated Risk today said in a post on housing starts showing that starts are increasing that

 "Residential investment and housing starts are usually the best leading indicator for economy."

If housing starts are up, then that should mean that a Fed interest rate tightening cycle is close to beginning.

Except that the Fed Funds rate has been at or near zero for an extended period of time.

Here's what happened with interest rates after the Great Depression:

It's impossible to know how long it will take for interest rates to normalize this time.

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