The Coming Economic Slowdown

The economy is due for a slowdown.This current economic recovery that started in November of 2001 should give way to a recession.You say why does the national economic expansion have to end (since the last recovery lasted 120 months)? Because that's the business cycle.The longer it goes the greater the probability of a recession.Here are some good reasons to expect an economic slowdown(if not a recession) in the next 12 months.
1)The new minimum payments on credit cards are higher.Those running balances will see a jump by the end of the year if they haven't seen it already.The old 2% minimum payment is going to 4%.For the millions of credit card holders just getting by, the higher payment will cut consumer spending.
2)The 30 year bond is coming back.Part of the reason interest rates have been so low the last couple of years is the federal government hasn't sold 30 year debt since October of 2001.The first quarter of 2006, the 30 year will be back.New supply means higher rates than would be if there wasn't a 30 year.This will push mortgage rates higher than they would be without a 30 year treasury bond.Higher mortgage rates might take some "froth" out of the housing market.
3)A new Federal Reserve Chairman is coming.Greenspan is leaving at the end of January of 2006.A new Chairman means the markets have to adopt to what a new Chairman "thinks" are most important economic numbers.The new Chairman will have to prove himself to the markets that he will defend the dollar and try and keep inflation low.Don't be shocked if a new Chairman comes in and raises interest rates 50 basis points between Fed meetings.Rates are most likely going higher especially since the inflation numbers aren't low anymore.Right now the Fed Funds futures are pricing in higher interest rates.
In conclusion,rates may go higher for the above three reasons and should slow the economy down.A year from now mortgage rates might between 7% and 8%.That might finally bring the giant housing mania to an end.The Republican party will not have much going for in the 2006 elections.