Economic Indicators

Paper Summary:

This paper addresses two of the most relied upon economic indicators, housing starts and interest rates, and the two are generally seen as related. It looks at how high interest rates mitigate against capital outlay for housing starts or major purchases, for instance and how an economic indicator is any variable that gives an indication of the direction of the economy.

From the Paper:

"Two of the most relied upon economic indicators are housing starts and interest rates, and the two are generally seen as related. High interest rates mitigate against capital outlay for housing starts or major purchases, for instance. An economic indicator is any variable that gives an indication of the direction of the economy. Housing is perceived as more affordable when there is a relatively low rate of interest for home mortgage loans, and the lower interest rates in general that have been adopted by the Federal Reserve to spur the formerly sluggish American economy after the recession of 2001 into its currently more robust state (Isidore, 2005). The lower the rate of interest, the more incentive there is for the consumer to borrow money to purchase a house."

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