UNEMPLOYMENT & INFLATION

New U.S home sales drop a sharp decline in the west is an economic news story that shows that the government should be actively involved in changing and stabilizing the economy. This is evident due to the unexpected drop in single home sales that affected the west region. The decline in sales shows a steady improvement in the housing market. The sale of new homes is volatile from month to month since it is drawn from small samples (Mutikani, 2016).

The volatility of the market is caused by different factors that affect the economy. Inflation causes the volatility of the market in a manner that the value of the single family homes cannot be realized. With an increase in the price of the house, it will push the sales further downwards. An increase in the inflation will have a significant impact on the volatility rate (In Shome & In Sharma, 2015).

Government intervention will play a great role in regulating the market. To curb inflation the government has to implement fiscal policies that will result in the stability of the economy. Controlling the mortgage rates which are associated with owning homes will be a vital step together with the U.S Central bank that is expected to keep short-term interest rates unchanged( Mutikani, 2016). In order to make the issue of home ownership successful, the government has to see that the fiscal policies are well implemented that will enhance the stability of the economy reducing the volatility and inflation rates. The intervention of the financial markets that deal with Federal Reserve Policy will also see the implementation of the fiscal policies (In Shome & In Sharma, 2015).

 

 

Reference

Mutikani L; (2016) New U.S home sales drop on sharp decline in the west; Reuters

In Shome, P., & In Sharma, P. (2015). Emerging economies: Food and energy security, and         technology and innovation.