White House: Unemployment To Average 9.8% In 2010

Real Estate Broker/Owner

This past week the White House downgraded their assessment of the economy when they contracted their GDP projection for 2010 from 3.2% to 2% and increased their original unemployment outlook from below 8% to 9.8%.

There are two concerns with unemployment.  The first is the actual percent, and the second is the duration.  What the White House is predicting, and keep in mind they have been behind the curve on this recession for the past two years, is that 2010 is going to be worse than 2009 in terms of sustained high unemployment.  Unemployment is expected to average "only" 9.3% for 2009.

What this means for the housing market is that we are going to see continued record setting foreclosure rates for another 12 months, maybe longer.  Already, in July, according to RealtyTrac, foreclosure filings were at a record high, and were up 32% from last year.

Additionally, a recent report published by Fitch Ratings showed that consumers are already on the brink.  According to their study, the "cure rate"  for delinquent mortgages plunged to just 6.6% when compared to 45% from the years of 2000-2006.  What this communicates is that once a homeowner falls behind on their mortgage payment, there is only a 6.6% chance they are going to get caught up.  And considering the MBA is reporting that a record 13.16% of all mortgages are at least 30 days late or in foreclosure, it paints a very worrisome picture for the housing market.

Yes, demand for housing has rebounded from the bottom thanks to a Fed $1.25 trillion funny money policy.  But it appears that foreclosures are going to rise at a greater rate than the demand for them.  This means we will be looking at at least another year of continued price deterioration in the housing market.  And this assumes that the Fed doesn't begin to contract their monetary policy yet. 

Comments (11)

Rick Cordisco
Pocono Mountain Lakes Realty - Lake Harmony, PA
Pocono Real Estate Professional

Mark, these foreclosures will be around for the next 5 years or so

Aug 29, 2009 01:14 AM
Carl Winters
Canyon Lake, TX

Mark: It is definitely all about jobs. Without a job you have to change your way of living. No money coming in, no money going out. Many of these homes that have sold due to the First Time Home Buyers project can very well go back into the market if someone should become unemployed. I'm an employmet recruiter with twenty plus years experience and these companies are not hiring. Ceil Winters

Aug 29, 2009 01:21 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

The economy has everything to do with housing. People without jobs don't buy.  People with foreclosures, short sales, and bankruptcy on their record are prohibited from buying, makes for a ever smaller pool of people to work with. 

Aug 29, 2009 01:22 AM
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Too bad the president promised that if they signed the trillion dollar bailout...we would not go over 8% this year.  I do not trust or believe any of their propaganda anymore.

Aug 29, 2009 01:34 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Morning Mark,  You're right -  the pro's have been pretty conservative over the last 2-34 years when it comes to the economy.  Hopefully the programs in place and a new sense of optimism will help us get through this.

Aug 29, 2009 01:56 AM
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

So in reading too quickly I thought you meant that those employed BY the White House would be losing their jobs - i.e. White House staff reduced 9.8%  - THAT would be heading in the right direction.

Aug 29, 2009 02:02 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark - It's just a bit of a "reality check" on the economy. Regardless of whether or not the recession is over--a somewhat meaningless analysis--the economy will not return to "normal" for several years.

Aug 29, 2009 02:21 AM
Robert McArtor
RE/MAX Components - Fallston Maryland - Bel Air, MD
Top Listing Agent for Baltimore and Harford County

I thought we were promised it wouldn't reach 8%? - Note to Whitehouse "Under Promise...Over Deliver"

Aug 29, 2009 02:30 AM
Kevin Comerford
Coldwell Banker Preferred - Media, PA

Mark, Where you been? Don't give up on us now, I'm a big fan of your blog.

Oct 07, 2009 10:52 AM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Hi Mark ! Just stopping by to wish you a Happy New Year, and hope to see you back in the Rain in 2010 !

Cheers !!

Dec 30, 2009 07:37 AM
John Cunningham
eXp Realty - Phoenix, AZ
Helping Phoenix Sellers and Buyers find each other

Mark, as usuals your data is both spot on and revealing. Thank you for the research that goes into producing the data.

Sep 20, 2010 05:27 PM