While most people now accept the likelihood that the U.S. housing slump is far from over, a little known fact of which you may not be aware is that 40 - 50 percent of all jobs created since 2001 were related to the housing market. So, with the housing market in a free-fall, you shouldn't be surprised that the Department of Commerce announced last Friday that the employment situation has continued to deteriorate and that the non-farm sector of the economy actually witnessed job losses (of 4,000) during August.
That same day, Countrywide Financial Corp. – the largest U.S. home lender – announced that it plans to reduce its workforce by 10,000 - 12,000 (or 20 percent) over the next three months, as the company expects home mortgage originations to decline approximately 25 percent in 2008 compared to 2007 levels.
These job cuts come on top of layoffs by IndyMac Bancorp. – the second-largest U.S. home lender – National City Corp., and a Lehman Brothers mortgage unit announced earlier last week. In total, mortgage lenders cut more than 15,000 jobs last week alone.
With inventories of homes for sale near historic highs, foreclosures at all-time highs and dozens of mortgage companies no longer making loans, you should expect job cuts to continue over the coming months.
Yet, just before last Friday's latest employment figures were released, 88 Wall Street economists expected, on average, for 100,000 new jobs to be created during August.
So, as I've suggested in past articles, you should probably stop listening to these "experts" — unless you're comfortable losing money — and start focusing on the facts. And, the facts overwhelmingly indicate that economic growth in the U.S. will slow considerably over the coming months and that stock prices in general will continue to trend lower.
© 2022 Newsmax. All rights reserved.