14 Difference with 10-yr Treasury rate, basis points …Credit Spreads Have Ballooned… Junk corporate Emerging market
15 Net % tightening standards …And Banks Will Continue to Tighten Source: Federal Reserve Board
16 Consumers (L) Small business (R) Confidence Is Rock Bottom… Sources: Conference Board, NFIB
17 House-price growth 6 mo. lead (L) Core retail sales growth 3 mo. MA (R) …And the Wealth Effect Is Kicking In Sources: Census, Realtors
18 When Will It End?
19 Another 10% to Go... % change from peak, Sources: Fiserv Lending Solutions, Census, Moody's Economy.com Early 1990s House price Home salesHousing starts Current downturn to date Early 1980s Current downturn forecast
20...With Big Differences Across the Country Projected peak-to-trough house price decline Sources: Fiserv Lending Solutions, Moody's Economy.com, OFHEO -10 to -20% 0 to -10% No decline -20 to -30% < -30%
21 Housing Is Becoming More Affordable… Sources: BEA, Census, PPR, Realtors Price-income ratio (R) Price-rent ratio (L)
22 Number of vacant homes for sale, ths, Source: Census …Inventories Are Peaking… Housing supply1,000,000 Single625,000 Multi300,000 Manufactured75,000 Housing demand1,500,000 Households975,000 Obsolescence400,000 Second homes125,000
23 Source: Bankrate.com 30-year fixed mortgage rate …And Nationalization Is A Plus
24 A Timeline to Recovery 08q108q2 08q308q409q109q2 09q309q4 10q110q2 10q310q4 Stock Market Bottoms Oil Prices Peak Home Sales Bottom Housing Starts Bottom Employment Bottoms House Prices Bottoms Foreclosures Peak Jobless Rate Peaks House Prices Resume Rising Financial Failures Abate Self-Sustaining Economic Expansion Begins Fed Tightens Extraordinary Writedowns End $ Rises
25 Serious Threats Remain.
26 The Financial System Remains Very Fragile… Financial stock index, Source: NYSE Financial shock strikes Bear Stearns fails Panic
27 Number of underwater homeowners, ths Sources: Equifax, Moody's Economy.com …and House Price Declines Threaten to Overshoot