Our economy isn't going to recover until the housing market finds its footing.
The FHA's success provides strong evidence that government can and should play a role in the nation's mortgage finance system. It also demonstrates that although government intervention in the economy during the Great Recession was messy, things would have been a lot messier without it.
The upshot of Mr. Trump's economic policy positions under almost any scenario is that the U.S. economy will be more isolated and diminished.
It has become fashionable to rail against government intervention in the economy, and the FHA is a favorite example by those trying to show the government's overreach. In reality, the FHA shows how government action during the Great Recession forestalled a much worse economic fate.
It is hard to be enthusiastic about the economy's prospects when house prices are falling: Households spend less, small business owners can't use homes as collateral for loans and local governments are forced to cut jobs and programs as property-tax revenue disappears.
Too-easy credit and millions of bad loans made during the U.S. housing bubble paved the way for the financial calamity and Great Recession that followed. Today, by contrast, credit is too tight. Mortgage loans are particularly hard to get, creating a problem for the housing market and the broader economy.
At the center of every recession is a serious imbalance in the economy and mirrored in the financial system. Think subprime mortgage and the Great Recession, or the technology bubble and the early 2000s recession. There are no such imbalances today.
The principal linkages between Japan and the U.S. global economies are trade, financial markets, and commodity markets.
An overheating economy, characterized by accelerating inflation and rising interest rates, is another precondition for recession. This doesn't describe today's economy.
Global central banks are working hard to lift their economies through an aggressively easy monetary policy. The ECB [European Central Bank] and BOJ [Bank of Japan] are buying tens of billions of bonds and other financial securities each month in an effort to stimulate their economies, which is pushing down rates everywhere, including in the U.S.
Past experience with fiscal austerity at home and overseas strongly suggests that it is best for the economy's long-run performance to restrain government spending rather than raise taxes.
If Mr. Trump gets precisely the policies he says he wants, then the economy will suffer a recession.
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