Eric S. Rosengren:"Housing business should prepare for worst"

By margarita Snegireva. If real estate prices and the level of transactions go on declining at the rate projected by many experts, the country faces "a longer string of back-to-back quarters of declining residential investment than at any other time in the past 50 years," new Federal Reserve Bank of Boston President Eric S. Rosengren told a business group in Connecticut Tuesday.

Dr. Rosengren was born on June 3, 1957, in Ridgewood, New Jersey. He graduated summa cum laude from Colby College with a B.A. and highest honors in economics. He then spent one year in Australia as a Thomas Watson Fellow. Following his year in Australia, he went to the University of Wisconsin, Madison, where he earned an M.S. in economics in 1984 and a Ph.D. in economics in 1986.

Dr. Rosengren has held senior positions within the Federal Reserve in both the research and bank supervision functions. He joined the Federal Reserve Bank of Boston in 1985 as an economist in the Research Department. He was promoted to Assistant Vice President in 1989 and to Vice President in 1991 as head of the Banking and Monetary Policy section of the Research Department. In 2000, he was named Senior Vice President and head of the Supervision and Regulation Department. He assumed the additional title of Chief Discount Officer in 2003, and in 2005, he was named Executive Vice President.

In his work as an economist, Dr. Rosengren has made the link between financial problems and the real economy a focus of his research, and he has published extensively on macroeconomics, international banking, bank supervision, and risk management. He has been an author on over 100 articles and papers on economics and finance, including articles in many of the top economics and finance journals.

The 50-year record will be broken if residential investment declines for nine or more consecutive quarters. The current decline began in early 2006. He said it is "all but certain" that residential investment fell in 2007's fourth quarter, and that it is likely to continue through the first half of this year.

He said residential investment was a "the laggard" among the components that make up Gross Domestic Product (GDP).

Rosengren was unspecific about broader economic ramifications of the housing market's fall.

"Previous periods where residential investment declined for a year or more were either accompanied by, or closely followed by, an economic downturn," Rosengren said in prepared remarks made available by the Boston Fed. "But history may or may not repeat itself because this period is distinctive in several other ways that add to uncertainty over its ultimate impact on the broader economy."

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