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If Economy Ready to End Quantitative Easing, Why are Evictions on the Rise?

October 30th, 2014 · No Comments · Economy

by Kristy Welsh

(Last Updated On: February 26, 2018)

If Economy Ready to End Quantitative Easing, Why are Evictions on the Rise?Yesterday, the Federal Reserve announced the end of quantitative easing, a program intended to boost the nation’s economy. On the very same day, though, CNN Money published an interesting article on the rise of evictions in cities nationwide. Something doesn’t add up.

The End of Quantitative Easing

As I blogged last year, Quantitative Easing (QE) is the Federal Reserve’s bond-buying program that “encourage(s) more lending by pumping more money into the U.S. economy. Mortgage-backed securities are a primary focus, the goal being to boost the housing market by driving mortgage rates lower.”

Ending QE is a sure sign that the Federal Reserve believes the economy is strong enough to do without, as evidently indicated by an increase in housing starts. (Plus, there’s the state of unemployment. It’s at 5.9 percent, far lower than right around the same time last year – 7.3 percent in September 2013.)

The Rise of Evictions

While housing starts may have nearly doubled since QE began in 2008, the rental market tells a different story.

As reported by CNN Money, the price of rentals has increased 7 percent over the past year while incomes have only increased by 1.8 percent. In other words, income is far from keeping pace with the increasing cost of living.

The result? Increased evictions, as renters struggle to pay the now average 30 percent of income spent on rent.

What Do You Think?

Do you see signs of an improved economy? If so, what are they? If not, why not? And what can be done about it? Do we need more quantitative easing or is the economy strong enough to stand on its own? The Fed plans to continue keeping interest rates low, but an increase is expected in the spring or summer of next year. Will we be ready for that too?

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