Another Fed Rate Cut: What Does It Mean for Southwest Florida?
Last week, the Chairman of the Federal Reserve, Ben S. Bernanke, sent a strong message that the central bank may lower interest rates in another attempt to hold off a recession. Mr. Bernacke added that the Fed will continue to monitor monetary policy and may well have to lower interest rates again.
The big question is: What does this mean for the people of Southwest Florida who are already in a recession? Unfortunately not much. In my opinion, the remarks were made to slow a spiraling and unsteady stock market. As of this writing, the stock market is well over 1,300 points off it's all time high of 14,000. The last time the Fed cut interest rates, the market surged, albeit temporarily. But this time, it seems big business and the Fed are finally getting the message that things are not good in the U.S. right now. In Southwest Florida, we face a whole host of problems which are not being addressed, yet our politicians keep spending our tax dollars.
Our economy is based upon consumer spending. As Mr. Bernanke adknowledges, higher oil prices, slumping home prices and a wavering stock market may reduce consumer spending. No Kidding. Many of our businesses and many jobs in our area rely on snowbirds. If the snowbirds have less disposable income, the annual trip to Florida becomes the first item on the chopping block.
Here is what I see happening in Southwest Florida. Higher Unemployment, higher gas prices, higher property taxes, dipping home prices, more foreclosures, more bankruptcys, less tourism, and let's not forget the ripple effect.
I promise the next blog will be more uplifting.
