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Economists Predict Rising Inflation; Housing and Foreclosure Crisis Continues in 2009

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By : John Cutts    99 or more times read
The success of Barack Obama's economic stimulus plan and the separate legislation for the remaining $350 Billion Troubled Assets Relief Program (TARP) for foreclosures may be the country's hope as economic analysts projected a 1.5 percent slash in U.S. growth this year. Bloomberg News Survey also forecast that interest rates can only be raised by Federal Reserve policy makers in 2010.

A survey taken from January 5 to 12 also showed that inflation will be below the considered price stability. Based on consumer spending without fuel and food expenses, inflation will increase 1.2 percent this year. The budget deficit is also expected to reach $1.325 trillion. The current forecast puts a huge burden on the Obama administration as this may be the longest recession the United States has had to face since World War II.

According to a study by the President-elect’s economic advisers, Obama’s two-year economic plan will, by the end of 2010, increase GDP by 3.7 percent more than if without the economic package plan.

Meanwhile, the housing crisis has taken its toll on households. Homebuilders are in now in a slump for four years and housing values have continued to plunge. With 2.6 million jobs lost in 2008 and the unemployment rate at its highest in 26 years — an 8.4 expected increase for this year– more foreclosures may be expected.

Aside from the economic stimulus package, Obama’s top adviser Larry Summers has submitted a letter to Congress outlining the next administration's policies for the remaining TARP money. Unimpressed by the Treasury Department's policies for foreclosure prevention using the TARP, Democrats want $100 Billion of the fund to go into foreclosure aid, and more transparency and accountability before the release of what remains. Republicans, however, are opposed to the release of any more additional money.

With or without the approval of Obama's request, homeowners will still be looking for more aggressive measures to combat the economic and foreclosure crisis.

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