Americans Spending Less Due To Foreclosure Crisis

Now that they’re losing their homes and most of their wealth along with it, Americans are cutting down on their costs due to foreclosure crisis.

The country’s economy is facing its biggest threat from the break down of the real estate market. The combination of surging foreclosures, depreciating home values and ever increasing mortgage investments is affecting both individuals along with businesses.

Federal Reserve Chairman Ben Bernanke is due to address a Berkeley, Calif., conference via satellite on Friday on the mortgage collapse. He is scheduled to address government officials and lawmakers to advise them on working on more ways to avail more relief.

The Bush administration is working on a plan to provide relief to over 3 million distressed homeowners by preventing their homes from becoming reo homes. This is done by the government, which is guaranteeing for billions of dollars worth of affected mortgages. This plan also plans to change the loans a bit so that interest rates could be lowered for a five-year period. The collapse in the housing market has started off the worst possible global credit and economic crisis in more than half a century. To battle against this foreclosure crisis, the government has taken serious action. The Treasury Department has done the same. It has put in $250 billion into banks for a partial ownership. The Fed this week bought out huge amounts of debt from companies. The government also cut down interest rates to 1 percent! This is the first time interest rates have been slashed so low in the last fifty years.

New economic reports due to be out on Friday will provide fresh information as to the stress on the American consumers. Economists anticipate that the income will hardly grow in September, rising up by a bare minimum of 0.1 percent. American consumers cut down on their spending in the previous month by 0.3 percent, according to the economists’ predictions.

Considering the current economic condition and the high unemployment rate, employees cannot expect their employers to be extra generous with their compensation to their employees. Economists are predicting that workers’ salaries along with benefit costs are expected to appreciate by 0.7 percent in the third quarter this year. That would go hand in hand with the same size increase from the second quarter this year. However, economists say that tougher times are still ahead.