Saturday, October 2, 2010
Number of the Week: 41.7 Million Spend Too Much on Housin
an encouraging sign in the housing market.. The census says that people are getting there housing costs back under control, slowly but surely. 36% of Americans were said to be spending of 30% of their pre-tax income on housing within the last couple years, which they say is the threshold of affordable. This is good to see that people are able to keep the housing crisis from getting worse, the last thing we need is more foreclosure in the housing market..
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3 comments:
This is definitely a good sign however when looking at the flip-side, during a recessionary period consumption levels need to increase. With people trying to cover their debts it means that they are not spending on goods and services which is crucial now!
I think there should be an incentive system in place to increase consumption and reduce savings at least a little bit!
I think that is why you are seeing even liberals asking for an extension of the bush tax cuts.. Lower taxes so people will be able to cover debt as well as spend, i think that is one good way to jump start the economy..
Historically, we know that lowering taxes and increasing government spending during a time of recession is not the way to go about stimulating the economy. However, no one ever seems to be able to change this- right now, no one wants to give more of their income to the government, but most economists would agree that is the way for the economy as a whole to increase. No one ever wants to pay taxes, especially at a time when they have little to no extra money to spend, but in order to rebound, and get the services we want from the government, it is fundamental that taxes not be lowered. My solution would be to give incentives in other areas- rebates on products for example (if trying to increase consumption)
On the issue of housing, I think people (in our current culture) are always going to pay too much for rent/mortgage. They see it as their most worth-while purchase, which is mainly true. But, with that being said, even before the housing crisis, it was evident that people were buying too much house, paying too much mortgage, and taking nothing less than the top of their budget to spend on housing.
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