Check out the latest from the respected Economists of the National Association of Home Builders. Click the header for a more detailed report.
Economic Growth Is Even Weaker Than It Looks
Real gross domestic product (GDP) contracted at an annual rate of 3.8% in the final quarter of 2008, according to the “advance” report released by the Commerce Department on Jan. 30. This was the weakest performance since 1982, although the decline was smaller than generally expected. (We had estimated a 5.5% decline.)
The Labor Market Is in Free-Fall
The current recession began in December 2007 as payroll employment topped out, and the contraction in employment has been accelerating dramatically ever since. The cumulative loss of jobs through January now comes to about 3.6 million.
Bank Lending Policies Still Are Tightening
Efforts by the Federal Reserve, the Treasury, Congress and the White House to improve the functioning of financial markets have shown some success, particularly in interbank and short-term securities markets, and huge quality spreads have narrowed a bit in some components of bond and mortgage markets
Housing Affordability Measures Surge, But Demand Weakens Further
The large cumulative decline in national average home prices, historically low mortgage interest rates and surprisingly resilient median family income have combined to push up standard measures of housing affordability in recent times.
Vacancies Still Are Excessive in Homeowner and Rental Housing Markets
The weakness of housing demand and the persistent upswing in mortgage foreclosures are keeping vacancies in the housing stock at historically high levels despite massive cutbacks in new housing production. And an economically induced slowdown in household formations is only exacerbating a bad situation.
The Fed Must Pull Out the Rest of the Stops
The Fed now has the target federal funds rate at its effective floor – at or close to zero. Furthermore, our central bank has aggressively provided short-term liquidity to sound financial institutions, including primary securities dealers, through creative use of the discount window.
Treasury’s ‘Financial Stability Plan’ Disappoints Financial Markets
On Feb. 10, Treasury Secretary Geithner unveiled the Administration’s eagerly awaited “Financial Stability Plan,” characterized as “Deploying our Full Arsenal to Attack the Credit Crisis on all Fronts.” Unfortunately, the financial markets expressed a good deal of skepticism about the plan as the stock market fell sharply and investors sought out the security of the Treasury market
Fiscal Stimulus Passes in House and Senate
Both the House and the Senate have now passed their respective versions of President Obama’s huge fiscal stimulus proposal, although neither can be described as ringing examples of bipartisan cooperation.
The Outlook Remains Uncertain While Policies Are in Flux
President Obama has talked about a three-legged policy stool that must be assembled if the U.S. economy is to avoid a protracted recession that could degenerate into a deflationary depression.