The Fed could be correct. On the other hand, with interest rates at 0%, and over $2 trillion of liquidity pumped into the economy via the Treasury’s printing presses one would hope things would at the very least temporarily improve.
There are so many foreclosed homes on the market now, that investors with cash should be gobbling them up. This would hopefully lead to a stabilization in real estate. However, credit remains very tight, and little of the $2 trillion that has been printed is making it into the consumer credit markets. What’s also should be looked at is the fact that so many Fortune 1000 Corporations have permanently shed their jobs or outsourced them to Asia. The business climate in the US doesn’t look too bright right now, and many firms are going where the action is -Asia. Even Europe had positive GDP growth last quarter. So don’t look at Wall St profits or gains to necessarily point the way out of this slump. We could very well have a jobless recovery.
And at some point, Bernecke will have to raise interest rates.