Labor Day weekend has come and gone, and with it, the folly of the “Recovery Summer” public relations campaign pushed by political leaders in Washington.
While the pols mull over the potential of a “Fiscal Fall Festivus,” the talk at kitchen tables across America will continue to focus on the ragged economy and how the country can finally climb out of it.
It’s certainly looking like a longer climb: The national unemployment rate rose to 9.6% in August, and the U.S. economy shed 54,000 jobs for the month.
It’s just the latest piece of bad news on the U.S. financial landscape. With unemployment heading in reverse, the economy is losing steam fast, and probably taking the housing market down with it.
In its weekly economic forecast for the last week of August, Lloyds TSB Bank expects that U.S. gross domestic product for the second quarter will be revised downward from 2.14% to 1.2%. For the third quarter GDP number, Lloyds expects that “growth could remain muted for some time.”
But it’s the housing market indicators from Lloyds that might prove worrisome for homeowners, but should help keep mortgage rates down for homebuyers.
Say bank analysts: “The weak labor market is also likely to coincide with continued weakness in existing and new home sales. Following a firmer-than-expected rise in June, we look for existing home sales to have fallen by 13.2% in July, to a level of 4.67 million.”
The only piece of positive news to offset the downbeat forecasts we’re seeing from housing market analysts like Lloyds is that mortgage lenders may finally be slightly loosening their credit purses. According to the 2010 survey of credit underwriting practices by the U.S. Office of the Comptroller of the Currency, 74% of banks tightened lending practices in 2010. That looks bad on the surface, but it’s still down from the 84% rate in 2009.