Employment Recovery a Key Issue for Lenders

If this is supposed to be an employment-led recovery, then it's going to be a long, slow slog from the bottom, according to the Mortgage Bankers Association's chief economist. Though the recession was "clearly over" last summer, Jay Brinkmanm said at the MBA's trade show, the employment picture is anything but rosy. The unemployment rate nationally has been pegged at a little under 10% by Uncle Sam, but Brinkmann said the true rate, or what he calls the "total" unemployment rate, is up around the 17% level nationally, and even higher in a dozen states. The "total" unemployment rate includes not just those actively looking for work but also people who are in and out of the workforce--discouraged people who are no longer looking, those who were forced to take part-time positions while seeking full-time jobs, and others who are only marginally attached to the work force. Not surprisingly, Michigan has the nation's highest total unemployment rate at 22.9%. But in something of surprise, California, the nation's largest housing market, is next at 22.9%. Nevada has a 21.6% total out-of-work rate, Florida is at 20.4% and North Carolina is at 18.2%. All are considered key housing markets. Real unemployment is "holding back the real estate market's recovery," Brinkmann said in presenting his outlook for 2010 and beyond. The MBA economist also noted that the number of unemployed workers who haven't had a paycheck for more than six months--"Almost a permanent kind of unemployed"--is rapidly approaching 50%. And in that regard, he added, "We are approaching absolutely uncharted territory."