Tips to Homeowners

January 06, 1985|ARMAND L. FONTAINE

Question: Do you feel there is a probability that interest rates will be rising now that the election is over?

Answer: Before the election, I attended a seminar given by the Alliance Bank, at which James Howell, professor of economics at Stanford University, was featured. Howell claimed that if either major political party should win the presidential election by a landslide, there would be an easing in interest rates and a steady fall in the value of the dollar. He predicted a fall in the dollar immediately after the election and a second one a few months after the election.

Howell said that interest rates are abnormally high as a result of:

1--The lenders' fear of inflation.

2--The Federal Reserve's tight-money program.

3--A boom in the economy with high demand.

4--The problems caused by deregulation of banks and other credit institutions.

Howell also predicted that the economy would be very strong through 1986, and that the continued recovery would result in great consumer participation, particularly in the area of housing.

Q: How does the United States rank in construction spending from government sources?

A: In a survey made recently by the Associated General Contractors of America and the Confederation of International Contractor Assns. in Australia, the United States was listed 22nd among 33 nations in the percentage of gross domestic product spent on construction projects. The leading country was Australia, which spent more than 20% of its GDP on construction, while the United States spent only 7.6%. Countries that spent more than 10% of GDP on construction include Japan, the Philippines, Sweden, Mexico, Germany, Switzerland, the Netherlands, Italy, Portugal, France, Chile, Denmark and Finland. Singapore ranked second at 23.9%, Costa Rica ranked third at 21.2% and Guatemala ranked sixth at 18.5%.

One must remember, however, that in very small countries, such as some in Central America, a single government construction project can make these figures meaningless.

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