THAT JUST ABOUT SUMMARIZES what is going on in the U.S. economy. Some weather watchers say the headwinds are close to gale force. The uproar in the subprime mortgage market has the rating the agencies becoming more picky; lenders are taking a longer look at borrowers before handing over money; and even the red-hot private equity deal makers are paying a bit more for the loans that finance their takeovers. That’s a headache they definitely don’t need while lobbying to fend off congressional attempts to raise taxes on a large portion of their earnings. Oil and gasoline prices remain at levels that are pinching consumers’ pocketbooks, and driving up the costs of doing business. Inflation is tame (up only 1.9 percent from last year) if you look at the “core” prices, excluding food and energy, as Federal Reserve Board chairman Ben Bernanke continued to do last week in a speech that economists at Goldman Sachs characterized as “very academic.” But members of the Fed apparently neither eat nor drive, according to consumers who find that inflation in food and energy prices is hurting them.
Then there is the housing market, with foreclosures rising (up 87 percent from last year’s level), and prices falling. Consumers notice when gasoline prices rise because they have to fill their tanks every week, and they notice when house prices fall because they have less to boast about at dinner parties. And those prices continue to fall under the pressure of rising unsold inventories. The spring selling season proved a damp squib: potential buyers are holding back in anticipation of still lower prices, and higher mortgage rates are making home ownership more expensive. You don’t have to be a statistician to know all of this: just look at the proliferating “for sale” signs in your neighborhood or those you pass through en route to work or the mall.
