U.S. home prices are falling as consumers tighten their belts, lenders up their borrowing standards and the subprime meltdown continues to influence the housing market, data released on Tuesday indicated. Illustrating the increasingly gloomy sentiment on America's Main Streets, the Conference Board said its Consumer Confidence Index came in at 64.5 well below the expected 73.5 points.Full Story here
To give you an example of the true effect imagine if you are about to go to dinner, you have $20 in your pocket, and you estimate a meal cost $15. You get to the restaurant, eat, and then realize you've lost your $20 bill. You would probably ask to borrow from a friend, but they've lost their $20 too! Now in terms of a recession, imagine this happening to our entire nation all at once. What happens? People stop spending superfluous money= restaurants/stores get less money= the owners of the stores spend less money= other stores get less money= you feel me? This pattern represents an overall decline in economic activity and it has continued for about a full month.
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