Foreclosures at the White House

Obama met a team of economists to analyze his plan of economic recovery that will be the main priority since taking over the power on January 20. U.S. Federal Reserve (Fed) predicts a decline of the Gross Domestic Product of the USA in 2009, based on a moderate increase only in 2010, according to the minutes of the monetary policy meeting in December, published on Tuesday in Washington.

In the document quoted by AFP, Fed confirms that they have operated a downward revision of the previous estimates of the growth, communicated in November, without mentioning numbers in this direction. Even with the use of instruments of untraditional monetary policy officialised by Fed in its first meeting on 15 and 16 December, the economic outlook would remain mediocre for a while, as it is shown in the document. For the responsible of the U.S. central bank, the GDP would fall in the first half much stronger than it has been originally anticipated, before starting to recover slowly during the rest of the year.

In the November forecast, the U.S. central bank recognized the possibility of a contraction of GDP in 2009, predicting increasing somewhere from -0.2% to 1.1%.
The National Association of Realtors in the U.S. announced lower sales of foreclosures and the Pending Home Sales Index, calculated based on the contracts signed in November, fell by four percent to 82.3, the lowest level of the past seven years because of rising unemployment and deepening of recession and foreclosures crisis, according to Bloomberg.

The November figures are in decline by 5.3 percent compared to values recorded one year ago. Increasing unemployment and weakening consumers’ confidence determined purchasers to stop signing contracts in November. The activity on the foreclosures market in December was even much lower because of the economic problems, said Lawrence Yun, chief economist at the NAR.

The U.S. foreclosures market has recorded the most serious decline since the Great Crisis, faced a huge stock of unsold foreclosures, more difficult lending conditions and a record number of cases of inability to pay, which led to lower prices of the houses. The problems faced by the U.S. foreclosures market remain the main risk of the global economy. The U.S. economy has registered in November 533,000 redundancies, the unemployment rate amounting to 6.7 per cent, the highest level for more than 15 years.

The elected president of the United States of America, Barack Obama, asked the leaders of the Congress to deal as soon as possible with the plan for economic revival, even though some Republicans insist that they need more time to review the plan details. Obama said that the Congress should vote the U.S. plan for re-launching, and reinvestment, designed to create 3 million jobs and he even advanced the amount required for its application: it is a cost of up to 775 billion dollars.

The U.S. economy remains the biggest challenge for Obama, who has occupied his position on January 20 2009. One of the owners of 10 homes in the U.S. has to pay overdue mortgage rates and risk foreclosure.

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