MacroScope

America has breathed a sigh of relief since April, as the summer selling season kicked in and the $8,000 first-time homebuyer credit nudged consumers off the fence into the most affordable market in years. These factors, along with easy financing from the Federal Housing Administration, was the first leg up for the “W,” said Lisa Marquis Jackson, a vice president at John Burns.

The onset of the weaker selling months, a building pipeline of foreclosures and expiration of the tax-credit on Nov. 30 will likely bring rising prices upturn to a halt, creating a “false peak” and fresh downturn, the group says. Federal efforts have slowed foreclosures but have not addressed many issues including unemployment and underwater mortgages, leaving a heavy “shadow inventory” set to knock prices to fresh lows.

An extension to the first-time homebuyer credit — bandied about by the Obama administration — may soften, but not prevent another leg down, the John Burns group said.

“We anticipate that foreclosure activity will remain very high at least through 2012, with the majority of future foreclosures coming as a result of job losses,” John Burns, president of the group, said in an outlook.

The second downward thrust to the “W” could also come as the FHA clamps down on credit, they said. Signs of stability in the economy will push mortgage rates higher, meantime.

Eighteen months into the worst recession in decades, and the pain of the downturn is reaching into nearly every U.S. state, city and municipality.

With ever more people out of work, consumer spending has dried up, depriving local government of sales tax revenue. The continued housing slump has wiped out real estate transfer taxes, while declining corporate profits have eroded business tax revenue.

From Maine to California, the slump has drained coffers at the very time that the cost of providing jobless benefits and healthcare has risen, straining public finances.

Ben Bernanke has taken some flack for his argument that “green shoots” of economic activity might lurk around the corner. In one such swipe, Justin Fox of Time Magazine argued that the metaphor is flawed because what we’re really talking about is a moderation of contraction, not growth.

Today’s Beige Book, a collection of anecdotal economic evidence compiled by the Fed, showed only a few very faint positive signs. On housing, the report said the “number of potential buyers” was rising — not exactly a sure sign of a bottom.

But at least the New York Fed’s regional factory data suggested that the Fed chief’s green shoots might just see the light of day. Again, it was mostly a story about lesser deterioration, but an improvement nonetheless. Apart from a much better than expected reading on the overall index (which is still, it must be noted, at -14.65), there was a huge rise in the new orders index (Also still negative, but now at -3.88, from -44.76).

It’s no surprise that the U.S. Bureau of Labor Statistics report on state unemployment is grim reading. Unemployment is up in 49 of 50 states (go Louisiana!). 

It may also be telling us something troubling about the prospects for recovering from this recession quickly. The states with low unemployment aren’t exactly the most exciting places to live, and even if you were prepared to move there’s the not-so-small matter of trying to sell your home in the middle of a housing crisis.

The states with the lowest unemployment include Wyoming, North and South Dakota, and Nebraska — far from the coasts where populations — and unemployment — are higher. Which brings us to the Oswald Hypothesis (don’t worry — we didn’t know what it was either until JP Morgan economist Michael Feroli mentioned it). Higher homeownership rates may increase the natural unemployment rate, essentially because that makes it harder for people to pick up and move.