Homebuilders complained to senators that rising interest rates are threatening their livelihoods.
Kent W. Colton, executive vice president of the National Association of Home Builders, said mortgage rate increases so far this year already have trimmed construction payrolls by 80,000 jobs.And if rates don't sink back slightly as the association expects, it could cost another 100,000 jobs and choke the economy's expansion, he told the Senate Banking subcommittee on housing.
Since early February, the Federal Reserve has pushed short-term interest rates up by three-quarters of a percentage point. During the same period, long-term interest rates set in financial markets have risen 11/2 points.
Colton's testimony was part of a continuing campaign by congressional Democrats to pressure the Republican-controlled Federal Reserve into keeping interest rates low.
"It's very puzzling what they're doing . . . and we're very deeply concerned about it," said Sen. Paul S. Sarbanes, D-Md., chairman of the subcommittee.
But Sen. Christopher S. Bond, R-Mo., said rising long-term rates, such as mortgage rates, have less to do with the Fed's action on short-term rates and more to do with market participants' lack of confidence in Clinton administration economic policies.