Friday, October 27, 2006

Slumping Ottawa Housing Market

The slumping housing market figured prominently in the economy‘s dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991.

The housing bubble burst and that really knocked down growth.

Everybody expected this. You have a combination of rising energy prices and also rising interest rates, and now you‘ve seen a reverse on both.

Economists took heart that consumers and businesses — outside of the residential sector_ spent solidly — which helped to cushion some of the fallout from the housing slump.

Spending on home building dropped at a rate of 17.4 % in the third quarter. That was the biggest drop since the first quarter of 1991 when such spending was sliced at a 21.7 % pace.

Weak inventory building by businesses also played roles in weighing down economic activity in the 3rd quarter 2006.

Even with the feeble third-quarter showing, analysts didn‘t believe the economy was in danger of sliding into recession.


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