Concerns about the global economic recovery, including lingering worries regarding European sovereign debt, and increasing caution at home among private employers and consumers are evidence of the tenuous nature of the current economic recovery, according to the July 2010 Economic Outlook released July 21 by Fannie Mae’s Economics & Mortgage Market Analysis Group. The group has revised its projected growth for 2010 to 2.8 percent from 3.2 percent, and remains on guard for a setback amidst increased uncertainty and downside risks.

“We have shifted into a lower gear in the economic expansion, due in no small part to the increase in financial-market volatility in recent months,” said Fannie Mae Chief Economist Doug Duncan. “As a result, private-sector employers are tentative about hiring decisions; businesses are building cash, but generally are investing in capital rather than labor. That reluctance to hire has had a knock-on effect on consumers, who are spending less as the deleveraging process continues.”

The question is, “is this a deleveraging process or is it the new reality?” Will we ever have employment numbers, occupancy rates, rents, etc. like we have had in the past? Have property fundamentals changed forever?

Your thoughts?

Invest well.

Peace.

BTW… For an audio synopsis of the July 2010 Economic Outlook, listen to the podcast on the Economics & Mortgage Market Analysis site at www.fanniemae.com. Visit the site to read the full July 2010 Economic Outlook, including the Economic Developments commentary, Economic Forecast, and Housing Forecast.

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