Although the Fed has been juicing the economy since late 2008, it doesn't feel that way to many people on Main Street. That's because a key part of the process has broken down.
Tight credit and a large number of underwater homeowners means that many middle-class Americans simply haven't been able to benefit from the Fed's low interest rates.
Now that the housing recovery is underway, that could change, said Federal Reserve Governor Sarah Bloom Raskin, speaking at the Levy Economics Institute's Minsky Conference on Thursday. Fed policies could suddenly become "increasingly potent," she said.
"As house prices rise, more and more households have enough home equity to gain renewed access to mortgage credit and the ability to refinance their homes at lower rates," she said.
Raskin pointed to Fed research estimating that when home prices increase 10%, that could be enough to get about 40% of underwater homeowners back into the black.
Raskin also said that if the Fed's policies boost the job market, that could help even the lowest-wage workers. It still won't be enough, though, to change long-term income inequality trends.
The Federal Reserve's Beige Book notes that more regions of the country have started slowing recently.
The report paints a picture of a "modest to moderate" recovery in June and early July, with better news coming from the housing market in particular. But one pocket of the country including the region surrounding New York, Pennsylvania and Ohio saw economic growth slow recently, the report said.
Previously, only the Philadelphia region had MOREAnnalyn Kurtz - Jul 18, 2012 2:24 PM ET
In a report on its 12 regional districts known as the "Beige Book," the Federal Reserve said that "overall economic activity expanded at a moderate pace." That's not particularly great news. The "moderate pace" thing is the same line we've been hearing for months now.
"Moderate" is actually one of the better scenarios in recent Fed parlance. Economic improvements have been a mixed bag of "moderates," "modests," and "steadys" for some MOREKaren McGowan - Jun 6, 2012 4:39 PM ET
China's booming economy is giving to the poor and taking from the rich when it comes to housing.
Some 14% of both the rich and the poor said they had trouble affording shelter in 2011, according to a recent Gallup survey. That's a dramatic change for each group in recent years, but the shifts were in opposite directions.
For the poor, 14% is half the percentage of people who didn't have enough MORETami Luhby - Mar 27, 2012 2:32 PM ET
The collapse of the housing bubble has further widened the home ownership inequality gap.
Black households, as well as the poorest households and those headed by high school dropouts, did not benefit much from the housing boom, but got hit hard by the subsequent bust, a new analysis of Census data by Fordham University Professor Emily Rosenbaum has found.
During the 1990s, blacks and Hispanics made gains that narrowed the home ownership MORETami Luhby - Mar 22, 2012 10:58 AM ET
Foreclosure sales are on the rise, even in states where banks need court approval to foreclose on a home.
Sales rose to 91,000 in January, up 29% from the month before, according to LPS Mortgage Monitor.
Foreclosure sales are when a bank completes the foreclosure process and takes possession of the home.
Experts have been closely monitoring foreclosure activity for signs of a resurgence.
Foreclosure sales had dropped in the fall of 2010 after MORETami Luhby - Mar 6, 2012 9:06 AM ET
More home buyers are bringing cash to the table these days.
All-cash transactions hit a record 34.1% of all home purchases last month, according to Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. That's up from 29.4% a year go.
"Despite near record low mortgage rates, homebuyers are finding it very advantageous in the current housing market to shop with cash," according to the survey. "And low returns on money deposited in banks as MORETami Luhby - Feb 29, 2012 4:17 PM ET
Will the housing market finally improve in 2012? The Carlyle Group thinks so.
The influential private equity firm issued a report Wednesday entitled "A New Dawn for U.S. Housing," in which it forecasts that housing construction and renovation will boost economic growth this year more than most think.
Assets linked to the housing industry have outperformed the overall market since the end of September and have "significant room to appreciate," the firm MORETami Luhby - Feb 29, 2012 3:45 PM ET
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