Reply #37: Very sad. And so much more bad news can be derived from this report [View All]

[54anickel]

How flush consumers are has big implications for the United States, since consumer spending fuels more than two-thirds of the economy.

Yes, and when you take it to the personal level of the unemployed/underemployed this does not bode well for a recovery. When I was employed, I made pretty decent money and had lots of descretionary spending. No longer true for me, wonder how many others are in the same boat. How will we make up what was lost of that two-thirds of the economy?

"In our judgment, this pattern could be another exhibition of household balance sheet stress, as the shift would seem to suggest that a relatively small rise in 30-year rates apparently excludes a significant number of prospective home buyers from qualifying for mortgage credit," Sullivan wrote.

Didn't they recently report housing starts up? How much of this development was on speculation? If it is getting harder to get a mortgage that is not ARM, I think we'll start to see a glut in housing. Dad was a builder, he was always afraid of building houses on spec in case it didn't sell right away. It's always a risky adventure.

But the job market has shown signs of life in recent months, and many economists hope that improvement will gather strength this year. If it does, said the ABA's Leggett, consumers will be able to bear the brunt of any housing slowdown -- eventually.

"Even if there's a pick-up today in job creation, we should not see a real improvement in delinquencies until later this year -- there's about a six- to nine-month lag," Leggett said.

If lenders are making assumptions like this regarding the job market/credit link they may be in for trouble. There has been so much info on those being considered employed in the data are actually under employed. That and the reports we have been seeing about the drop in real income. Very troubling news indeed.