Chicago Fed President Charles Evans offered an unusually downbeat assessment of the economy today. It was one which raised concerns about a continued sharp drop in the housing market and the chances of a double dip recession. The Fed’s regional presidents, governors, and senior staff have begun to splinter away from Federal Reserve Chairman Ben Bernanke’s relatively modest plans for intervention in the capital markets and his lack of a plan to aggressively promote programs to combat flagging GDP and intransigent unemployment.
Evans, commenting about foreclosures:
Projections suggest foreclosed housing units could reach as high as 3 million in 2010 with over a million lender repossessions. Mortgage distress is not limited to those with subprime loans. For example, in the state of Indiana, the inventory of subprime foreclosures actually decreased by about 4 percent from 2008 to 2009, while the inventory of prime foreclosures rose by over 36 percent. This is because job loss and unemployment are now causing more defaults than imprudent lending.
That point of view is supported by today’s NAR data on home inventory and annual sales rates.
Douglas A. McIntyre
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