Everyone is anxiously awaiting an economic recovery, which many economics predict will happen in the third quarter of this year. However, growth in GDP won’t necessarily mean that the average American is better off. There are still ongoing issues including unemployment and housing woes that will continue to affect millions of Americans. See the following article by Diana Golobay from HousingWire that describes why economists are warning that we are not out of the woods, even if the recession ends.
The end of the economic recession later this year won’t necessarily mean relief for thousands of unemployed homeowners struggling to make payments, according to the American Bankers Association’s (ABA) Economic Advisory Committee.
Bank economists generally see the recession ending in the third quarter, signaling economic growth despite lingering highs in unemployment.
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“The economy will return to growth but not to health,” says Bruce Kasman, committee chairman and chief economist for JP Morgan Chase, New York. “Growth in the coming quarters is likely to gather momentum but will not prove sufficiently robust to undo much of the severe damage done to our labor markets and public finances.”
The committee sees an end to the three-year housing market downturn, with housing starts rising later in 2009 and home prices moving modestly higher in 2010.
“Lower prices and low mortgage rates have greatly improved the affordability of homes,” Kasman adds. “A recovery in the housing sector will be an important contributor to economic growth.”
But credit conditions are likely to remain tight and employers will continue to shed jobs, pushing unemployment up to a 10% peak before leveling out at or above 9.5% through next year.
This article has been reposted from HousingWire. View the article on HousingWire’s mortgage finance news website here.