By: Jack McCabe
I watched President Obama’s speech Thursday night announcing his new job stimulus program with great interest, and again was greatly disappointed with what he had to say.
While building and repairing the country’s infrastructure and a few other programs would be helpful to the economy, I believe one thing is certain. This president and his administration don’t understand that the housing market is the foundation of our economy, and until the housing market becomes positive, none of these expenditures for economic stimulus will matter. We will continue to have a sideways, no-growth economy that borders on recession for years. This president and the majority of members of both parties in Congress don’t get it.
Seventy percent of the U.S. gross domestic product is generated by consumer spending. It is the single largest component of U.S GDP.
Consumers spend based on their income from working wages and investments. What does our country invest in? Approximately two-thirds of Americans invest in buying the home they live in, more than double the number of all other investments (stock market, bonds, etc).
Building equity/ownership of a home has been a self-imposed, forced savings account for many Americans that’s paid off for many generations with financial security and collateral for credit for additional spending.
Second mortgages and equity lines of credit have funded large-ticket expenditures (automobiles, vacations, home improvements, etc.) and advanced educations for millions of Americans.
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