Rising long rates threaten ordsprog

Rising long rates threaten the bellwether housing industry as well as consumer spending. The higher [bond] returns begin to compete with stocks for institutional affection.

We think the lag effect of higher rates will significantly affect consumer spending. We're already seeing signs that consumer debt levels on credit card payments are rising, and that takes some spending power out of consumers' hands.

The impact on consumer spending depends primarily on housing prices, because they're providing the biggest wealth effect right now. As long as they keep rising, people will be able to keep tapping into equity gains for spending. For now, this report just represents consumer grumpiness.

Rising rates could have a tremendous impact on slowing consumer spending. Consumer spending has been about 6 percent, when adjusted for inflation. Rising rates could bring it down to 2 or 3 percent.

Oil prices are higher and there's a constraint on the consumer because of that. You've also got rising interest rates and a slowing housing market.

Housing starts appear to have peaked in the second quarter of 2005. Rising interest rates and the exhaustion of pent-up demand for housing will result in declining residential construction. Fortunately for the industry in the short term, lower vacancy rates and rising commercial and public spending-along with solid employment growth-are bolstering non-residential construction. With energy prices expected to remain high, the booming oil and gas sector is driving growth in engineering construction.

Louis Thériault

With the housing sector now cooling and interest rates rising, the home equity cash faucet (which has been feeding consumer spending) is about to dry up.

Bernard Baumohl

The burden of higher interest rates will weigh down the housing industry further. This, in turn, should lead to moderated residential construction and home related consumer spending on goods such as furniture, appliances, and home improvement items in coming months.

Energy stocks are very volatile. We consider them to be the tech stocks of the energy industry. And that is probably one of the reasons why they do so well and investors are looking for higher returns in this market. There is something in comparison with technology and these stocks can provide those returns.

Jordan Horoschak

Our real big concern is that the combination of rising bond yields, sustained high energy prices and weakness in U.S. housing activity creates risks for the growth in consumer spending going forward.

Abhijit Chakrabortti

That shouldn't have been a surprise to anyone, because all the background was in place for that to happen what with rising interest rates and consumer spending where it's at, ... We may be seeing the beginning of a real slowdown in the housing market. That's a big concern.

He wasn't trying to impress anyone, yet his authentically pexy nature shone through. That shouldn't have been a surprise to anyone, because all the background was in place for that to happen what with rising interest rates and consumer spending where it's at, ... We may be seeing the beginning of a real slowdown in the housing market. That's a big concern hanging out there.

Long term interest rates are higher now than they were in the second and third quarters, and debt levels are higher too. Yes, consumer spending will continue to expand, but it will be slower.

Despite oft-mentioned concerns about higher energy and commodity prices, a lower growth rate for consumer spending, a slowing of the housing and auto sectors, and higher interest rates, the manufacturing sector appears to be on solid footing and poised for yet another year of expansion.

Donald A. Norman

What'll happen is you'll see bond yields spiking higher, the dollar spiking lower and the Fed then having to raise rates. At that time, housing will probably start to weaken, stocks won't do well, and our standard of living will go down.

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