When the Federal Reserve began talking about scaling back its massive stimulus program this summer, the markets freaked out. But Americans? Not so much.
The Fed has been buying billions of dollars in long-term bonds each month to push down long-term interest rates and boost the housing market. The hint that the Fed might start winding down that program helped drive mortgage rates up an entire percentage point in 2013 – a spike that some worried could damage the sector.
But a new survey released Monday by the New York Fed shows that the volatility in the markets barely made a blip in consumers’ minds. The amount of uncertainty that households have over home prices remained flat through the second half of last year.
There was a slightly larger impact on Americans’ expectations for home prices. In June, they forecast prices would rise more than 4 percent. In December, that number was down to 3.9 percent. However, the range of predictions was wider at the end of the year than it was over the summer.
It goes to show that sometimes the emotions people have about the economy are just as important as what actually happens. This year, markets are hyperobsessed with how the Fed will end its stimulus program. We’ll be keeping an eye on this new survey to see if the debate even registers with the rest of America.