ECO 306 Week 2 Discussion
Hello, everyone!
I have chosen the years 2000 to 2015 for this. I selected it because it accurately depicts a
time of financial uncertainty in the United States and because I remember parts of this time
period. The federal funds rate was 5.45% in January 2005; it increased slightly to 6.53% in June
of that same year; but, by January 2002, it had sharply decreased to 1.73%. After a brief plateau
when the rate remained almost constant, it reached 1.00% by April 2004. People were buying
homes during this time, and banks were purchasing mortgage-backed securities. Because of the
new house mortgage, people were flourishing and purchasing homes. Due to the new home
mortgage program, which made obtaining a mortgage easier for those with bad credit scores and
credit histories, people were flourishing and purchasing homes. The federal funds rate spikes
from June 2004 to July 2006, returning to 5.24%, then plateauing again until a year later (July
2007). During this time, the economy is once more experiencing serious difficulties, and
individuals are no longer able to pay their mortgages as they once could. The unemployment rate
rose as a result of the property market collapse. The unemployment rate remained quite high
from 2007 to 2010, after which it started to decline once more.
The federal funds rate had a dramatic decline in July 2007 and remained low until 2016,
when it briefly climbed from 0.12% to 2.42%. Homebuyers were able to obtain reduced interest
rates on loans that were locked in and wouldn't increase for the duration of the loan period,
which was advantageous for companies in the short and long terms.
