Yellen Has Scant Power to Relieve U.S. Housing Slowdown

[Purveyor]

By Rich Miller and Victoria Stilwell May 28, 2014 12:44 PM ET

The hesitant housing recovery has surprised and concerned Federal Reserve Chair Janet Yellen and her colleagues at the central bank. It’s not clear how much they can do about it.

While the industry is rebounding from a weather-ravaged first quarter, the pickup will probably fall short of previous projections, according to economists at Goldman Sachs Group Inc. of New York and Macroeconomic Advisers LLC in St. Louis. As a result, they trimmed their forecasts for economic growth in the second half of 2014 to about 3.25 percent from 3.5 percent.

“Housing is a growing worry,” said Macroeconomic Advisers’ senior economist Ben Herzon.

Yellen and many of her colleagues agree. The Fed chair flagged the industry as a risk to the outlook in testimony to Congress on May 7, while Federal Reserve Bank of New York President William C. Dudley said last week he had been surprised by how weak it had been recently. He added that he still expects gross domestic product to “get back on a roughly 3 percent growth trajectory” after stalling in the first quarter.

The trouble from the Fed’s perspective is that many of the forces holding housing back are outside of its control. While the Fed can influence mortgage rates through its conduct of monetary policy, it can’t do much, if anything, to counteract the other causes of faltering demand: lagging household formation, stingy lenders and wary borrowers.

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http://www.bloomberg.com/news/2014-05-28/yellen-concerned-by-housing-slowdown-she-has-scant-power-to-cure.html

[MannyGoldstein]

1. Everyone is powerless to do anything

They'd all love to, but gee, they're powerless.

[trublu992]

2. No one thought Greenspan was powerless to do anything

some people thought Bernanke was inept but not powerless, its interesting how Yellen thinks she is powerless.

How are they surprised? Housing stills sucks, its directly tied to how much people earn and keep. Some people are getting hired at lower salaries than they had prior. Others are trying to find work to no avail. The current workforce hasn't had a raise since forever. Young people who graduated are swamped in debt in a weak job market. The other half of young people who aren't going to college are working crap minimum wage or wage slave jobs, where they will be joined by their college educated peers. Older people have had their household expanded by their children moving back in. People's home equity is still in the gutter. The Feds are people educated at the elitist of universities where they are supposed to be at the forefront of what we have to offer society in terms of intelligence and their surprised the housing market hasn't made a recovery?

[seabeckind]

3. Oh for fuk's sake

raise the dam interest rates.

A little inflation helps people. Let the 1% ride with no return for a few years. I sure as hel have.

Lord.

[blkmusclmachine]

4. Poor excuse to do nothing. They'll wait til the next GOP Admin., and ram awful stuff thru.