MBA Predicts Employment Won’t Recover Until More than 2 Years After Recession Ends
- Jan 28, 2009
By Keat Foong, Executive EditorWashington, D.C.–Ten-year Treasury interest rates are likely to fall further this year, according to Mortgage Bankers Association (MBA).MBA projects that the 10-year Treasury yield will fall to an average of 2.8 percent in 2009 compared to 3.7 percent in 2008 and 4.6 percent in 2007. Speaking this week at MBA’s state of the real estate industry conference call for the media, Chief Economist and Senior Vice President Jay Brinkmann noted, however, that Treasury rates could rise as the amount of bonds sold is increased to finance the government debt.Brinkmann said that the 30-year mortgage rates have remained “fairly benign” largely because of continued tightening of the spread between the 10-year Treasury and mortgage interest rate. Brinkmann also said in the briefing that it will likely take nine quarters or more for employment numbers to recover after GDP bounces back at the end of this recession. “In the last three recessions, it has taken longer and longer for employment to recover” as the economy moves away from manufacturing, he said. “This recession will follow a very similar pattern.” In the year ending November 2008, at one end of the spectrum, Texas had the highest employment gain, of 221,200, while Florida experienced the greatest job losses, of 206,000 units, according to the Bureau of Labor Statistics. MBA projects that multifamily starts will decline by 1.1 percent this year to 279,000 units , compared to 282,000 last year and 309,000 in 2007. Total housing starts MBA forecasts will plunge by 22.9 percent to 698,000 units this year compared to 904,000 units in 2008 and 1,355 units in 2007. Job losses will dampen household formation, said Brinkmann, and certain markets, especially in California and Florida, will take a while to work out the excess inventories.