8. Psychological damage to US economy

While the current US housing contraction has caused plenty of fears and worries, its direct impact on the broad US economy has been rather limited. Much of the damage has been at the psychological level. WHILE the current US housing contraction has caused plenty of fears and worries, not just in the US but throughout the world, most do not realise that the direct impact of the housing contraction on the broad US economy has been rather limited. A lot of the damage has been at the psychological level. This is due partly to the fact that house prices, which rose substantially, have been dropping recently. Another factor has been the constant media attention given to scary forecasts that the current housing contraction is the worst since the 1930 Great Depression and that this time around, it could be heading that way.... [read full story]