Saxo Bank experts determined the main threat that can not only slow down the pace of American economic growth but also stop it completely. According to them, the US housing market is the main reason. It not only stalled the American economy but also accelerated the 2008 global financial crisis. This sector remains the majоr danger both for the United States and the whole world. However, there is no reason for panic, at least for now. “The US economy is in perfect shape, excluding housing. The problem is that housing is a key driver of US growth and the current slowdown should be considered by investors and the Fed as a very worrying omen for 2019,” - Head of Macro Analysis Christopher Dembik noted.
Even taking into account the fact that at present the US economy looks very strong, it is necessary to closely monitor important economic indicators and be prepared for different scenarios. According to Dembik, this problem has three main reasons. The first one is the acceleration of prices which is now being observed in the American real estate market. The cost of housing in 20 major US cities jumped sharply by more than 50 percent compared with 2007. The second reason is the slowdown of the market itself. Confidence among American homebuilders dropped to 60 points, its lowest level since summer 2016. Similar trends were unfolding just before the global economic crises in 1999 and 2007 and during the collapse of stock markets in 2013.
The third one is a potential bearish trend. For many investors, the slowdown in the housing market is one of the key indicators in making decisions; therefore, the slowdown can trigger an asset sell-off and a fall in stock markets.
