The real estate revival will cause revival of markets by Petra Kamenicka

The economy of U.S. is now in a period of economical slowdown, or beginning recession. A clear proof we can see in a situation on the stock market. This market was in previous year plummeted by some significant factors. Among this factors belong for instance record-breaking price of oil, weak dollar, weak housing market and rising unemployment rate. But what caused this unpleasant situation? Paul Larson, the editor Morningstar Stock Investor newsletter is a proponent of an opinion, that this problems in American economy started because of the real-estate market popping. Values of real-estates sank. This factor caused a contraction of available credit and then, decrease in consumer spending followed as a result. Another factor, that contributed to this negative development on markets were high oil prices, as Paul Larson says. Rising price of oil generally causes rising prices of everything that is spent by consumers. Rising unemployment rate is one of attendant phenomenons. In this situation on markets, there are, of course, winners and losers. Among the companies, that do very well in this conditions are oil companies and even some retail chains, such as Wal-Mart which sells now demanded affordable goods. Companies, that have problems with this conditions are some retail companies. Airlines are now fighting with a huge problems. The most significant obstacle is a price of fuel, that increases their costs. According to Larson´s opinion, all companies in this field seem to have no competitive advantages. As a solution of this problem can be used downsizing and rationalization. This steps seem to be inevitable. This situation will end as soon as the real-estate market will go up. When this market stabilizes we will in short period probably see expansion of credits in banks, this means that people will spend more. This changes will provide The Fed some space to raise interest rates. Increase in interest rate is an inevitable step in a fight against a threat of rising inflation. On the other hand, increased interest rates will result in stronger dollar. And stronger dollar results into relief in oil prices. This are some economical consequences.

related story: http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080522&id=8682083

by Petra Kamenicka for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.<br><br><font size=2>These news are original content from young talents around the world and are selected for you by Chris Cantell.</font><br>




posted by Lucia Adamova