Economics - Inflation or Deflation during 2013
The key indicators reflecting US economy:
1. US Current Unemployment Rate is: 7.9% as of Feb 2013.
2. FOMC interest rate (Fed Funds Rate) is at 0 - 0.25% from last querter of 2008, that is more than 4 years.
| Fed Discount Rate | 0.75% |
| Fed Funds Rate | 0.25% |
| Prime Rate | 3.25% |
3. The 10 year correction on home prices with respect to inflation is reached as of March 2012. Refer to http://www.softwareandfinance.com/Magazine/2013_January/2013_Home_Price_Forecast_USA.html
4. Current inflation rate is at 2.07%
5. USD to INT conversion rate is at: 54.73
6. The dow jones index reset its all time high on March 05, 2013.
7. Current National Debt is: US$ 16.665 Trillion
8. Current mortgage debt outstanding as of 3rd quarter of 2012 is: US$ 13.119 Trillion
Reference: http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm
The data from zillow provides a rough estimate on negative equity:
Rough estimate of total number of mortgages issued are around 50 million.
27.5% of mortgages are still having negative equity that mean 13.8 million home owners out 50 million are having negative equity. But the good news is it is 2 million down from the last quarter of 2011.
Based on the above data, the interest rate may be at near zero and inflation will pickup during this year. Once the inflation reaches above 3% to 4%, then the interest rate will start rising. In the mean time, that is during 2013, home prices will continue to go up and US$ will continue to rally across all major currencies.
FYI:
Fed Discount Rate is the interest rate charged by the Fed when banks borrow money from the Fed. The discount rate will be lower than the Federal Funds Rate.
Federal Funds Rate is the interest rate charged by banks when banks borrow money from each other.
The Prime Rate is the interest rate charged by banks to their customers with excellent credit score
Related Links:
http://www.census.gov/housing/hvs/data/histtabs.html