The associated fall in consumer spending has helped bring inflation down allowing room for interest rates

The associated fall in consumer spending has helped bring inflation down, allowing room for interest rates to fall back again. Rising inflation has forced the Federal Reserve to raise interest rates which, in turn, has undermined consumer confidence. That, in turn, would create another downdraft for US consumer demand.In the past, these changes in consumer confidence have been closely correlated with the interest rate cycle. As the right-hand chart suggests, this could lead to falling house prices and, presumably, to a slowdown in “cash outs”, the American shorthand for mortgage equity withdrawal. As Ian Morris, HSBC’s US economist, has argued, historic relationships suggest that house prices could be vulnerable in an environment where consumers are beginning to scale back.

Second, there’s the less obvious – but hardly surprising – relationship between consumer confidence and house prices. No heroics, no dramatics, but, most crucially, nothing to seize upon for his critics. And, at the final whistle, there were surely no misgivings from Jonathan Woodgate at his journey from Yorkshire to the North-East which could yet end with him securing a championship medal. Sir Bobby Robson is too experienced for such careless talk, and neither was the Newcastle manager prepared to raid his adjectives stock unnecessarily when asked for his observations on the club’s £9m acquisition.
“Quiet” was his considered opinion after a performance from the England centre-back which suggests that, while it will take a little longer before he becomes an idol of the Gallowgate, it was a shrewd purchase even in these deflationary times. First, there’s the obvious relationship between consumer confidence and consumer spending. Could it be that consumers have finally recognised that a world of high debt with an uncertain economic future is perhaps a world where retrenchment is the only sensible option?If so, the Federal Reserve has got a major problem on its hands.

That’s fine so long as the illusion of economic health can be preserved but once consumers realise that things are not quite as good as they once seemed, they’re likely to pull the plug on demand. The chosen solution to an excessive debt problem has been to create even more debt. And, because debt values are fixed in nominal terms, there’s not a lot that the debtors can do about it apart from face the slow, unpleasant grind of debt repayment.The policy choices of the past two years may simply have made matters worse If debt was too high two years ago, it’s higher still today. Woodgate timed one telling challenge on Jesper Gronkjaer with perfection early on, and otherwise handled with typical competence Eidur Gudjohnsen and Jimmy Floyd Hasselbaink – a player who was moving on from Leeds when Woodgate was breaking through from the junior ranks.”Jonathan’s not played for seven weeks [as he was recovering from a hip injury] and he was making his debut in strange surroundings,” added Robson “He hadn’t even played a reserve match. But he’s gone into the game full-pelt and didn’t try to do anything clever. He was cautious and adequate.”Not a description of Newcastle at the moment This was United’s fourth successive victory They are unbeaten in eight.