Today the significant nonfarm payroll report came out with worse than expected numbers. We have been reading about job losses for weeks, and they continue with evidently quicken pace. Of the 1.2 milliion lost jobs this year, 651,000 have been lost the last 3 months.
Some predictions have unemployment growing to over 8%. We are 6.5% now.
FNMA's economic analysis for October points to the nonfarm payroll as a leading indicator of foreclosures. Of course this should not be a surprise, but for a nation already in a foreclosure crisis caused by dropping property values and high interest adjustable rate mortgages, the threat of additional foreclosure problems from declining employment is not good.
Taken from FNMA Economics and Mortgage Market Analysis
We are using $700 billion to bailout banks for the apparent purpose of purchasing other banks. Our economy is faced with mounting job losses, and the real prospect of a major automotive industry crash.
Over the next few months there will be a debate about the nature of an economic stimulus. The Bush administration is insisting on a targeted immediate impact. Obama seems interested in a more long term solution for employment, such as infrastructure construction or alternative energy development.
My guess is that the new stimulus will stall out until the new administration and the significant democratic majority get started on their economic package during what will likely be a very friendly honeymoon period.
Not real sure what our employment picture will be in three months, but it seems to me the quicker our leaders get started on a broad and coordinated economic plan the better. It seems to be a mistake to rely solely on the $700 billion bank bailout and federal funds target rate cuts.
We need to get people back to work. We need to create a real mortgage modification program. We need to find ways to increase the number of buyers. Two simple ways to do this is to bring back seller funder down payment assistance (or a 100% FHA purchase program) and to bring back 100% conventional loan programs.
We need these quick, before things start to get out of hand.
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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Mortgage lending offices located in Chattanooga, TN
rsmith@aamonline.com
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Richard, great information and great post. I agree they need to get busy now and now wait for the new administration. The longer they wait, the deeper the black hole becomes and the longer it takes us to get out of it.
I hope we will here some more positive press out there, I feel everybody is waiting for the next "bad" news to arrive and nobody moves forward, ... waiting for the rainmaker?
Richard, Good informative post. The bailout is far from being allocated. Payrolls are indeed a leading indicator of economics and I am afraid the news is going to continue to get more bleak. 8% is a conservative estimate. Many of the economists that I have read pushing the numbers up to as much as 12, even 15%. Assuming this is the case, we are in for a serious world of slow recovery and hurt. I am trying to remain optimistic.
BO
We really need some smart folks right about now. Government is too important to be left to politicians. The economy is too important to be left to economists. The list goes on!
Good post. Thanks for making the info available together with your comments.
Richard,
Thanks for the post. The fallout from these numbers don't bode well for our industry. This economy needs a real boost. But it won't be an over night sensation!
Hi Richard, In trying to be an optomist ( very difficult these days) I also am hopeful that this begins at once and not wait until the new administration.