Economy at Risk of Deflation

Robert Reich, a former Secretary of Labor, has written an essay about the end of the housing bubble that has been propping up the American economy since 2001. He says the Federal Reserve's interest rate increases raise the risk of deflating the entire economy.

What does that mean to the average man on the street? Here's a quote:

A more immediate problem will arise for all the people making, financing, and selling houses. Here we're talking about a vast army of carpenters, plasterers, roofers, plumbers, electricians, mortgage bankers, home inspectors, real estate agents, architects, structural engineers and many more. According to Moddy's Economy.com, housing-related employment has accounted for almost a quarter of the five million jobs that have appeared since 2003.

These jobs pay well even though most of them don't require a college degree. That's because they don't have to compete in global commerce. Workers in Beijing or Calcutta can't easily build houses in Phoenix or San Diego. Moreover, demand for housing-related work has been rising faster than the supply of people to fill them, at least until recently. But now with the housing boom over, many of these good jobs are over, too.