Economic Indicator Forecast Paper Essay Example | Topics and Well Written Essays - 1500 words

Economic Indicator Forecast Paper - Essay Example It has been forecasted that the FED is going to increase the interest rates in late 2009 or early 2010 therefore the expectations are that the prime interest rates will be in the range of 3.50% to 4.00%. Another forecast indicates that until December 2009, the prime interest rates may hit the figure of 4.00% and will continue to move upwards until 4.75% in December 2010. (http://mortgage-x.com, 2009). This forecast is slightly more generous than the earlier projection however, considering the other fact that financial system has to cope with the increasing losses too therefore it is possible that the interest rates may go up to 4.75% in December 2010. The increase in the prime interest rates may decrease the demand for automobiles because the financing cost of such products would increase and consumers may find it difficult to purchase new cars at high increasing interest rates. Further, it may also be possible that the increase in interest rates may further increase the overall cost of doing the business for automobile firms. The forecast up to Oct 2009 indicates that the new housing starts within US would be 683,000. (http://forecasts.org, 2009) however; recent statistics suggest that there is a steep increase in the housing activity in the country. Whereas according to some estimates, the housing starts are going to depress or at least remain within the current limits until 2011. (National Post, 2009). These forecasts indicate somewhat mixed forecasts as it indicates that the housing starts may indicate random patterns on month wise averages however, the overall projections may indicate that the housing starts would remain at the present level at least up to 2010. I believe that later forecast that the housing starts will depress until 2010 are more plausible because interest rates are projected to increase later this year therefore the finance to builders as well as mortgage rates are set to increase too. This may therefore, result into