More Foreclosures Expected as Housing Crisis Continues in Florida

In the first six months of this year, households in most of the country's largest 200 cities received more foreclosure warnings than in the first half of 2009, The Associated Press reports. High unemployment -- 9.5 percent in June, which doesn't include the millions of Americans who are no longer eligible for benefits -- is the main driver, and foreclosure listing firm RealtyTrac expects 1 million Americans to lose their homes to foreclosure this year.

While the metro areas with the most warnings were in Florida, California and Nevada, the crisis is expanding to other metro areas.

"The face of foreclosure is driven much more now by unemployment than in the past, and it's moving out from the places where we've been focusing on in the last few years," said Rick Sharga, RealtyTrac senior vice president. "The combination of a weak job market and a weak housing market is making it difficult in some of these areas."

Meanwhile, some economists and economic reporters continue to focus on the wrong indicator -- consumer confidence -- when gauging the economy's performance.

Explains the Center for Economic and Policy Research's Dean Baker, one of the few economists to identify the housing bubble before the bust:

"Consumers are actually spending at a relatively high rate. (The savings rate is well below historic levels.) The problem is that they lost $8 trillion in housing wealth. The housing wealth effect on consumption is something that economists have known about for more than 60 years. It's too bad that they seem to have forgotten, and so have the reporters who cover this issue.

The problem is not confidence. It is a lack of money. That is why consumers are not spending more and will not anytime soon regardless of how happy they are."

Author: Paul Wachter