Nationwide Chief Economist: Brexit Impact on U.S. Economy Overstated
With Thursday’s vote on whether the U.K. will exit the European Union looming, many wonder what the impact of a so-called Brexit would be on the U.S. economy.
Nationwide Chief Economist David Berson on Wednesday remained optimistic about the health of the U.S. economy despite uncertainty surrounding Britain’s EU referendum.
“Whether we get the U.K. leaving or staying in the EU, the impact on the American economy is probably going to be pretty small,” Berson told Fox Business Network’s Connell McShane. “In the short run, financial markets could panic simply because it’s not happened before and so we could see a flight to safety. For the real economy, what it means for jobs and income, I think it’s going to be very small here.”
Berson discussed strong home sales-- which he said continue to rise. Last month, existing home sales reached an annualized rate of 5.53 million units, data from the National Association of Realtors reported Wednesday, to record a nine year high.
“I think we’ve got a lot more room to go,” Berson said. “There’s room for the housing market to expand further.”
While the housing market continues notching gains, Federal Reserve Chief Janet Yellen, in her semi-annual monetary policy address to Congress Tuesday and Wednesday, indicated the U.S. economy is still not stable enough to withstand higher interest rates.
While Many Americans have taken advantage of low rates by rushing to refinance their homes, Berson predicts the initial demand to do so will begin to slow.
“Unless rates fall further, you’re going to have fewer and fewer people who can refinance because they will have already done so. Now, on the home buying side the low mortgage rates are certainly beneficial but what’s more important is what happening in the jobs market. Job and income numbers are always the most important thing for the housing market.”
Despite a significant dip in nonfarm payroll jobs added to the economy in May, which Berson said was an anomaly, he predicts the numbers to recover and reach 150,000-200,000 for the rest of the year. The Labor Department reported just 38,000 net new jobs last month, compared to expectations for 164,000 jobs.
“We’ll probably see decent job numbers going forward. I think that’s going to push the housing market up, and as long as mortgage rates don’t skyrocket—and there’s no prospect of that-- than the housing market should continue to expand over the rest of this year.”