Job market gloom saps spirits

Consumer confidence takes a hit as good mortgages go bad. Is this stimulus finally ready for its close-up?

By Andrew Leonard
June 30, 2009 7:59PM (UTC)
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Americans are bumming out, and the jobs market is the No. 1 reason why. After getting progressively more optimistic about the economy since President Obama took office, consumers are suddenly less confident about future prospects.

From Bloomberg:


The share of consumers who said more jobs will be available in the next six months fell to 17.4 percent from 19.3 percent. The proportion of people who said they expect their incomes to rise over the next six months decreased to 9.8 percent from 10.8 percent.

The continued labor market weakness probably explains why mortgage delinquencies are rising even for prime mortgages.

Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier, indicating that the pain that began in the "subprime" area is spreading as more people struggle to meet their mortgage payments.

Prime mortgages 60 days or more past due climbed to 2.9 per cent, from 1.1 per cent at the same point in 2008, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision

But not to worry, Christina Romer, chairman of President Obama's council of economic advisers, told the Financial Times on Monday that the stimulus has not yet begun to fight.

Ms Romer said stimulus spending was "going to ramp up strongly through the summer and the fall".

"We always knew we were not going to get all that much fiscal impact during the first five to six months. The big impact starts to hit from about now onwards," she said.

That would be nice.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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