By Rick Glaze

Since the Federal Reserve Bank began ratcheting up interest rates 18 months ago, housing has probably experienced the biggest slowdown of all the economic sectors.

One of the Fed’s most important jobs is keeping inflation low without creating a recession. Inflation acts like a tax on all citizens, raising prices and costs for almost everything. The tighter your budget, the more the price increases hurt. If the Fed tightens too much, a downward spiral could start, resulting in a slowdown in business, which leads to fewer jobs and higher unemployment. So the Fed walks a fine line, and by all accounts they have done a good job balancing the current vibrant economy.

Since 2003, when the Federal tax cuts were enacted, there have been 5.8 million new jobs created and $1.26 trillion added in economic output, according to government figures. Although parts of the world are growing faster, the United States is still the growth engine of the world, creating opportunities for success both here and abroad.

In related news, Congresswoman Nancy Pelosi, representing the 8th district, said if the Democrats win back the Congress in November, they will “jump-start our economy and reform our economic policy.” It’s hard to add anything to that statement.

Meanwhile, the large company stock indexes continue to set new highs. For the first time since the market recovery in 2003, large stocks are outperforming their smaller brethren.

The ups and downs of the stock market can still make some people nervous. Remember, stock market investments are long term and should be only a part of a family’s portfolio. Part of an investment plan is the pillow test. When you put your head on the pillow at night, you want to be comfortable with your investment allocations.

Rick Glaze is president of Glaze Capital Management Inc. of Los Altos and a general securities principal offering securities through First Allied Securities Inc. For more information, e-mail Rick@Glazecapital.com.