Why so meek economy?
Foreclosures will peak by the end of next year and unemployment will climb about 10% as the housing market and U.S. economy hang on with the aftermath of the recession still lingering. The widespread view envisions a slowly growing economy and improving housing market, with home price declines abating and fixed mortgage interest rates remaining below 6%.
The strength of a rebound will depend on whether consumers, who are still worried about job security, will bump up spending. For the most part, the recession is behind us but the effects of the recession will float around for some time in the form of higher unemployment and lower levels of business investment and home construction. The all powerful government projects that economic activity will slow again in the first half of next year but recover in the second half.
The speed at which businesses are rehiring is lagging. Unemployment is the main reason homes are now being lost to foreclosure, as borrowers struggle without income and lenders are left with fewer options for reworking faulty loans. Many lenders have issued a moratorium on foreclosures, causing a drop in the number of discounted, bank-owned properties hitting the market this year.