Mayors Predict Rising Foreclosures in 2008
Mounting home foreclosures will lead to “profound” effects on the economy next year, bleeding billions of dollars in lost tax revenues, shrinking job growth and reducing consumer spending in the nation’s major metropolitan areas, according to a new report released this week by the U.S. Conference of Mayors.
Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation’s economic activity.
The study said at least 1.4 million homes will enter foreclosure next year. That will worsen the already sharp housing downturn, with ripple effects on hiring and spending. Overall, businesses will create 524,000 fewer jobs next year. Tax receipts will fall by $6.6 billion in 10 select states. Nearly 130 cities around the country will face sluggish growth, as economic activity expansion is reduced by more than a third in 65 metro areas alone, the report predicts.
Moreover, the report projected big economic losses in some of the nation’s largest cities. New York, for example, is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.
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