Housing Slide in U.S. May Drag Economy Into Recession as Foreclosures Rise

[marmar]

By John Gittelsohn and Bob Willis


Aug. 23 (Bloomberg) -- Housing led the U.S. out of seven of the last eight recessions. This time, it may kill the recovery.

Home sales collapsed after a federal tax credit for buyers expired in April. Since then, the manufacturing-led expansion, which began in the second half of 2009, has been waning, with jobless claims rising and factory orders falling.

“If foreclosures continue to mount and depress home prices, that could send the economy back into a recession,” said Celia Chen, an economist who tracks the industry for Moody’s Analytics Inc. “The housing market and the broader economy are closely intertwined.”

Spending on home construction and items such as furniture and stoves accounted for about 15 percent of gross domestic product in the second quarter, according to West Chester, Pennsylvania-based Moody’s Analytics. Real estate also can influence consumer spending indirectly. When values soared in the mid-2000s, people used the boost in equity to pay for cars and vacations. After prices fell, homeowners lost that cushion and curbed spending.

A report tomorrow by the Chicago-based National Association of Realtors will show July sales of existing homes plummeted 12.9 percent from June, the biggest monthly loss of 2010, according to the median estimate of economists surveyed by Bloomberg.

New-home sales, which account for less than a 10th of housing transactions, stayed at the second-lowest level on record last month, economists predict Commerce Department data will show on Aug. 25. ..........(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601087&sid=a97ljRcJ_fBU&pos=6

[zazen]

1. "back" into a recession?

[Lost4words]

2. back?

[lib2DaBone]

3. Jobless Recovery..., Double Dip..., Sluggish economy....

If you are a politician in Washington... living in luxury.. things look good.

[xchrom]

4. Recommend

[earthside]

5. There has been no 'recovery' ...

... for middle and working class Americans.

Any 'recovery' has been because the super wealthy elite squeezed some more profit out of lay-offs and leveraging interest rates.

One of the big reasons this recession will linger and probably deepen for middle and working class Americans is because the administration, the Fed, and the Wall Street gamblers cling to this notion that this is just a 'worse than usual' part of the normal business cycle ... and that all the old tools used seventy years ago will work again, eventually, they sure hope so.

But with a housing inventory of maybe as many as ten million homes out there, the prospects of housing leading a 'recovery' is laughable. Besides, with the housing construction industry now so heavily populated by exploitable workers who send a good chuck of their earnings back to their country of origin, well, the time when dry-wallers and roofers and concrete workers could give a pop to the economy are long gone.

Pres. Obama and Timmy G. and Larry Summertime need to understand that this is a depression caused by a fundamental and structural change in the economy: peak oil, massive debt, overpopulation, and corporate robbery are huge problems that cannot and will not be solved by "stimulus" spending or by tinkering with Wall Street reforms.

We need a bold change in direction towards decentralization, restoring real free enterprise competition, breaking-up banks and the mega-transnational corporations, reducing the tax/necessities burden on the middle class (health insurance, college tuition, sales taxes, fees, etc.), and re-negotiating trade agreements so that we can bring manufacturing jobs back to the U.S.

Until Pres. Obama and Timmy G. figure this out, then this economic crisis is going to get worse. This report about the housing-foreclosure disaster is prime evidence that real change is desperately needed.

[RKP5637]

7. The changes you suggest are what I thought I was voting for, real change. To date we

have ban-aids holding together a propped up obsolete economy that benefits a few percentage points. The masses are told a line of BS on how great a job is being done. It's all BS to me. The rotten pilings supporting this fake economy still exist. I guess this makes me a far left wing-nut for not falling in-line with the rhetoric-bubble of DC. I'm tired of drinking the Kool-Aid. Robert Gibbs should realize many are fed up with it, and we are the moderates.

[aquart]

6. You mean as we continue to do nothing about foreclosures.

Ain't we clever. Good to know executive bonuses remain high, however.

[L0oniX]

12. ...and as we continue to spend over a trillion on the pentagon.

[Old Codger]

8. Recession?

INTO??? We have been in one for quite some time now, we are sliding deeper by the day, there will come a time (soon I am afraid) they will be forced to admit to it is in fact a depression.

[The Northerner]

9. Did the economy even slightly exit the recession?

[ixion]

10. And the sign read: "Welcome to the Greatest Depression"

just ahead on the path a piece.

[L0oniX]

11. •••

[Imajika]

13. Wait, isnt this recovery summer?

Calling this "recovery summer" truly was one of the dumbest things this administration has done. Whatever genius thought that up should hopefully have been fired by now. At least it seems like they quit using that idiotic term.