Saturday, January 06, 2007

Inflation is the major worry to US economy?

If there was a single theme expressed by Alan Greenspan from late 1987 to early 2006, it was this: "Inflation is a threat to the economy." Current Fed Chairman Ben Bernanke has the same worry, going by The Feds hint at the possibility of further interest rate hikes to keep inflation in check.

The two biggest risk areas for 2007 are a correction of an inflated housing market and a leveling off in the manufacturing sector.

Construction of new homes dipped in the second and third quarters of 2006, a decrease from nearly 2.3 million starts early in 2006 to about 1.6 million starts in November.

Now, most of the top economic forecasters are predicting a "soft landing," for the US economy which means the economy slows but not so sharply as to cause a recession.

The problem is whenever a recession hits us, most of the same experts are wrong.

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