Submitted by Leslie Ransom, Founding Partner.
Last week, the National Bureau of Economic Research reported what most of us already know: The United States has been in a recession since December 2007. The NBER said that the deterioration in the labor market throughout 2008 was the key reason it decided to state that the recession began last year.
A surge in foreclosures was likely another influencing variable pushing the NBER to state the obvious. A record 1.35 million homes were in foreclosure in the third quarter of 2008, driving the foreclosure rate up to 2.97%, the Mortgage Bankers Association recently reported. That’s a 76% increase from a year ago, according to its National Delinquency Survey.
Does the dour economic news mean that we should give up and plan on hibernating through 2009? That’s probably not a good idea, given that the average length of the past 10 recessions since World War II has been 10.4 months, with a range of six months in the 1980 recession to 16 months in the 1973-74 and 1981-82 recessions.
The natural marker for the end of this recession would appear to be sometime during the second quarter of 2009. Of course, there are no guarantees. Things could get worse; no recession is exactly like any other recession, but the odds favors us being closer to a recovery than to an extended economic contraction. Indeed, the unprecedented array of economic policy measures, many directly aimed at buttressing the housing and mortgage markets, suggest a recovery is forming, if not already progressing. What we do know with certainty is that recessions present buying opportunities that don’t last forever, and that includes this recession.
Information courtesy of Synovus Mortgage Group.