Lehman failure accelerated the do loop, was never expected.
House prices 5 to 15 percent down. Housing needs to stabalize before there is a recovery, not sales.
Foreclosure up, inventory is double, sales are down 0.28, will take till 2011 to work out excess inventory. Housing affordability is the best since 1979. 0.20 decline in household wealth.
Equity withdrawal are highly dependent on price of houses. Low interest rates do not push equity extraction. Income and consumption are spreading apart, the stimulus did not affect consumption. Households are trending towards savings. Housing starts will drop again. Higher loan standards by 0.75 of banks. Comercial loans are still very low, most businesses still have a good cash position, but are cautious in the downturn of consumption. Spread between treasuries and commercial bonds is 0.06, average is 0.02. Corps have cash, but credit is tight and will have to finance internally.
Net exports are down but have increased since 2006, this means an influx of cash coming from elsewhere. 2009f 9.7 percent of gdp is deficit, including stimulus package.
Sub primes are falling but the other shoe is coming, alt a and option arm, peoples principal is growing and not getting paid down, do we have the policies in place to handle these defaults.
Negative cpi -.05, has not happened since 1959, value of currency is inverse of price level.so value of dollar will rise. Make sure th timing of liquidity is appropriate. Unit costs are falling and productivity are still risingn must not let it faltera must find coordination, firms are more productve andcan lay ff more people.
Real gdp -1.8
Cpi -0.5
Prime 3.3
3 mo tbill 0.5
10 year 2.7
30 year mortgage 5.0
Liquidity powder keg, banks are under enormous pressure, must lend, but must be careful who lend to.
Regional forecast.
Region was up 1.9 in 2008, recession nationally but not regionall because of DoD.
Taxable sales in hr fell 4.1 and hotel rev -6.5, because of gas price increase, financal market turmoil freeze on short term loan markets. 4th quarter was horrible for sales. Significant differences between different areas and different time periods. Williamsburg was not able to maintain sales groth from 2007 celebration. Williamsburg has lost 12 per market share.
Housing permits have fallen similar to the nation. Builders have learned from the 1980s.
Inventory in hr is excess suply of 400k homes. Inventory mut clear before prices stabalize, expect 12 months to do. From 2005 to 2008 it pays to rent a home especially if you expect house prices to decline. Regional gdp will rise .6 sales will be down 3.0
