Mortgage Bankers Association has issued the following Economic Commentary:
"Data from the housing industry have revealed huge declines in housing sales and starts, building permits, and applications for loans to purchase homes. Consumers have lost confidence, and car sales have tailed off. Reports from abroad indicate a slowdown in the rate of growth in industrial activity.
"Growth in private payroll employment averaged 200 thousand a month in March and April, but then subsided to an average of 58 thousand in May and June. There seems little doubt that real GDP growth is decelerating significantly, probably to a second half pace of around 2-1/2%... The recovery from the 2001 recession started slowly and finally gained momentum, but there were four quarters of growth below 2% before more robust growth kicked in.
"Credit availability to small businesses and consumers remains constrained, impeding full recovery. The more likely outcome is that a period of subdued growth will be followed by resumption of somewhat stronger expansion next year. The U.S. economy has repeatedly demonstrated its resiliency to shocks. Still, there are probably more downside than upside risks to a forecast of about 2-1/2% growth in the second half of this year, followed by slight improvement thereafter. Increasing regulatory burdens, forceful but unpredictable government actions, and a slowing economy all make it difficult for businesses to plan and spend for the future.
"What can be done if the worst happens? reduction in the federal funds rate... The Fed could, of course, reactivate its asset purchase program... purchases of agency debt or mortgage-backed securities, ... another round of stimulus, could be used again if the Congress were willing to support an increase in the deficit,... a permanent, across the board, income tax cut of substantial magnitude would help to invigorate spending by consumers and businesses, ...extending the Bush tax cuts for another year or two."
This entire report is found at: http://www.mortgagebankers.org/NewsandMedia/PressCenter/73419.htm