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July 29th, 2009

Recovery on the way… slowly

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That’s the view of the president of the Federal Reserve Bank of NY:

The U.S. economy will likely see moderate growth in the second half of 2009, but the recovery will be considerably slower than usual, the president of the Federal Reserve Bank of New York said on Wednesday.

A modest recovery in housing activity and car sales, the impact of the fiscal stimulus and a sharp swing in the pace of inventory investment should give the economy a boost, William Dudley said in remarks prepared for delivery to the Association for a Better New York.

But working against those factors, said Dudley, is the fact that consumers aren’t ready to spend yet, what with the body-blow they’ve taken to their net worth combined with rising unemployment. Credit availability will be limited for a while as the financial sector figures out how to deal with accumulated ‘toxic’ assets. On the bright side, Dudley doesn’t see any threat to inflation in the near future.

This recession isn’t much different from previous recessions. There’s always debate about when they began, and there’s always disagreement about when they ended — both events as seen in the rear-view mirror. Dudley’s simply reiterating what any number of pundits and seers have been saying.

As our veep, Keith Gumbinger, puts it, “Anyone who says they see momentum is kidding you and themselves. Recessions all end the same way — by hitting bottom, stumbling along at the bottom, and ever so slowly picking up again.”

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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