Five Reasons for Rising Home Prices

The Federal Reserve’s latest Beige Book Survey shows that sales of autos and homes helped boost economic growth last month, this in spite of lingering unemployment woes that show no signs of improvement.

All twelve Federal Reserve districts showed signs of economic improvement listed as either modest or moderate, according to the Beige Book survey. Data for the survey is gathered from all of the Fed’s 12 district banks in order to compile information for the report.

Information from the report, which was prepared for the next Federal Open Market Committee meeting on Jan 29-30, is expected to “strengthen the resolve” of Fed policy makers to continue their $85 billion monthly purchase of bonds in order to help the economy, housing and labor markets improve.

The unemployment picture continues to be an eyesore in the over all economic recovery. In reality the “official” unemployment rate of 7.8 percent is not accurate, nor realistic. The methodology for figuring the unemployment rate was changed under the Clinton Administration to include only those individuals that are actually receiving unemployment benefits.

Factored out of these figures are those who no longer receive benefits, and many of these have given up looking for work altogether. When factoring in these individuals the real unemployment rate would be closer to 11 or 12 percent, depending on whose assessments are used. Many economic analysts believe that in order to see a full healthy recovery the real unemployment rate must drop significantly, not just the official rate.

All twelve Fed districts reported “some growth in consumer spending.” Auto sales in all the districts were reported as steady or stronger as well. Only nine of the districts reported growth in residential home sales, with these being described as “moderate or strong.” New home construction was reported as higher in 11 of 12 districts.

Kevin Hartmann