Excess supply of housing during the next year portends poorly for our economic recovery.

According to the Mortgage Bankers Association, nearly 8 percent of all residential mortgages in the United States are seriously delinquent (past due 90-plus days or foreclosed). Seven years ago, this figure was close to 2 percent.

Nearly four million mortgages totaling $800 billion are in jeopardy.

Should all four million homes go into foreclosure, national income and the market value of real estate could fall $800 billion, under a worst-case scenario. The economic multiplier and wealth effect could further erode GDP by an additional $400 billion during several years, for a total decline of $1.2 trillion.

While this scenario is remote, it is likely that nearly half (2 million homes) will be foreclosed on, double the annual historic average of 1 million.

Therefore, income could decline more than $500 billion during the next few years due to mortgage debt default. Unfortunately, this will be accompanied by high levels of unemployment, underemployment and individuals exiting the labor market.

At best, anemic economic growth and weak employment growth seem likely during the next year or two.

A shift in economic policy is critical to reinvigorate our economy.