“Eye on the Economy” with Adam Perrotta
- Jan 16, 2009
As President-elect Barack Obama prepares to take office, it appears he might face an uphill battle in getting his pick for Treasury Secretary, Timothy Geithner, through confirmation hearings quickly. Geithner, currently the president of the Fed’s New York bank, has come under scrutiny over some personal tax questions, and his confirmation hearing—originally scheduled for Thursday—has been delayed until after Obama’s inauguration next week.
With troubling economic indicators still being released on a seemingly regular basis, many are of the mind that, should Geithner’s nomination be held up, Obama should select a new nominee in order to ensure that the Treasury Secretary position—these days an even more vital role than usual—is filled as soon as possible.
And indeed, the bad numbers continue to roll out. Retail sales dipped for the sixth straight month in December, marking the longest stretch of consecutive monthly declines in more than 40 years. Especially troubling was the fact that the 2008 holiday season—measured as sales for November and December—dropped 2.8 percent over 2007, according to the National Retail Federation. It was the first time that year-over-year holiday sales dropped since the group began keeping stats in 1995.
Meanwhile, the federal budget deficit continues to skyrocket, bloating by $83.6 billion in December, the Treasury said. That brings the total deficit for the first three months of the 2009 fiscal year to $485.2 billion. For some comparison, the deficit for the entire 2008 fiscal year was $455 billion, and fiscal 2007 was $161 billion. Much of the deficit growth is attributable to the some $7.2 trillion shelled out by the government in financial stabilization efforts over the past few months. Exacerbating matters is a decline in both business and personal income tax receipts. With 1.5 million jobs lost thus far in fiscal ’09, personal income tax receipts are down 6.7 from the same period last year. But that decline is minor compared with business tax revenues, which are off a staggering 45.5 percent. Many experts expect the total deficit for fiscal ’09 to break the $1 trillion mark, as the incoming president plans to lay out even more funds to stimulate the economy.
One possible bright spot in the economy lies in mortgage applications, which rose in the first week of the year as rock bottom interest rates sparked demand levels not seen in nearly six years, according to the Mortgage Bankers Association. The industry group’s index of mortgage applications jumped 15.8 percent, to the highest reading since July 2003. However, the vast majority of the new applications are for refinancings, and not to purchase homes. Refinancings made up 85.3 percent of all mortgage applications, the highest level since the MBA survey began in 1990. The lack of home buyers is bad news for those looking for a reduction in the glut of unsold homes still languishing on the market.
(Adam Perrota is a news writer for Commercial Property News, a Multihousing News sister publication.)