PHOENIX -- Stocks surged Thursday on the heels of an announcement from the Federal Reserve, the day before the annual economic forecast for Phoenix is announced.
Federal Reserve Chairman Ben Bernanke announced the fed will pump $4 billion a month into mortgage backed securities until unemployment drops.
“What the fed is doing will make it easier for people to buy homes,” said international finance professor John Mathis of the Thunderbird Global School of Management.
Mathis said people who already own homes will be able to refinance to a lower rate, giving them extra spending money.
“That will allow people to have freed up funds to spend on other goods. That other spending will stimulate economic activity,” said Mathis, who believes the increased economic activity will lead to more jobs.
The Fed also announced that it will keep interests rates low until 2015. Mathis thinks that, coupled with relatively low housing prices in Phoenix, make it a good time to buy or refinance.
Ken Beckrich, a financial expert at Scottsdale’s Online Trading Academy disagrees that Thursday’s announcement will stimulate the economy and lower unemployment.
“It can’t. It will have no impact on unemployment. That’s not the problem. The reason there’s unemployment is it costs too much to hire a worker,” Beckrich said. “What they’re effectively doing is they’re getting a new credit card to pay off the old credit card debt.”
Friday, economic forecast numbers for 2013 will be announced at the Cox Communications/Greater Phoenix Chamber Economic Outlook. An early snapshot of the numbers expected to be released tomorrow shows a year of gradual recovery for the Phoenix metro area.
The forecast will also predict some growth in the housing market.