SEPTEMBER 2012 US ECONOMIC AND HOUSING MARKET OUTLOOK

Freddie Mac released its US Economic and Housing market Outlook for September showing consumers and businesses have become more energy-efficient thereby dampening the negative impact of recent fuel price spikes on the economy.  Monetary policy is unlikely to be affected by short-term fuel price inflation, thus allowing for extended and favorable interest-rate environment. Between 1973-2011, energy consumption fell by 0.3 percent (annualized) to 314 million BTUs per capita.  Fuel economy of passenger cars has also improved, rising from an average of only 13.4 miles per gallon (MPG) in 1973 to 22.6 MPG in 2008.  Measured relative to square footage, homes built since 2000 have fuel costs that are about 30 percent lower than that of homes built before 1960.  Anticipate a favorable interest rate environment to remain at least through the end of this year to help energize the housing market.