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Specialists warn of possible bursting of US housing bubble


Specialists warn of possible bursting of US housing bubble

Washington, Feb 16 (Prensa Latina) The housing bubble in the United States could burst in 2022 if the Federal Reserve raises interest rate to face inflation, US experts warned Wednesday.
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US inflationary growth reached 7.5% year-on-year in January 2022 affecting not only prices but also assets, economist Desmond Lachman warned.

Purchasing large amounts of bonds by the US Government in 2021 generated a share price bubble, so that values hit levels rarely seen, Mr. Lachman stated.

As a consequence, Mr. Lachman pointed out, there are bubble conditions in the stock market as well as in the US housing market.

In the case of housing, for instance, even if adjusted for inflation, prices are higher than in 2006, before the last 2008 housing crisis. In this context, Mr. Lachman insisted, whether the Federal Reserve aggressively increases interest rates, it risks bursting asset price bubble, which could lead to a recession with consequences in emerging market economies.


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