Recovery Act Provides $5 Billion to Assist Needy Families

The U.S. Department of Health and Human Services (HHS) today announced
the availability of up to an additional $5 billion in emergency funding
for the Temporary Assistance for Needy Families (TANF) program. This new
Emergency Fund, established by the American Recovery and Reinvestment
Act of 2009, will help states serve more families seeking employment
opportunities and other forms of assistance during the economic
downturn.

"More Americans have lost their jobs and their health care and they are
struggling to put food on the table," said HHS Spokeswoman Jenny Backus.
"The Recovery Act gives states the resources and the flexibility to
ensure they provide assistance and employment opportunities that will
help get more Americans back on their feet."

In order to be eligible to receive resources from the Emergency Fund, a
state must demonstrate an increase in the number of families receiving
assistance from the TANF program or an increase in expenditures on
employment subsidies or short-term, one-time benefits in at least one
quarter during Fiscal Years 2009 or 2010.

In addition, the Recovery Act provides states with more flexibility in
using TANF funds unspent from prior years to assist families in need and
temporarily modifies the caseload reduction credit to ensure states are
not punished as the number of families seeking assistance increase
during these difficult economic times. The Recovery Act also continues
a supplemental grant program that provides additional support to 17
states with growing populations.

Recovery Act funds used to support the TANF program will be subject to
the same rules and restrictions as other TANF funds. Existing federal
work requirements and time limits apply to families receiving assistance
with Recovery Act funds exactly as they do to families receiving other
federal TANF-funded assistance.

"Americans are seeking the security and dignity that comes with a job
and millions are doing all they can to find work in one of the worst
economic downturns in our history," added Backus. "The Recovery Act
reinforces work and responsibility and helps ensure hard-working
Americans support their families as they continue to seek work or hold
onto a job during tough times."

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The Conference Board Maintains That Global Growth Rates Are In Positive Territory

/PRNewswire/ -- The Conference Board reports yesterdaythat global output growth in 2009 will be slow but remains positive at 1.3% for 2009. As the G-20 gathers in London today, The Conference Board points at large discrepancies in the global economy this year, with advanced economies experiencing a strong contraction in output at -2.5% on average, and emerging economies pulling the world economy along at a reasonable pace of 5.0% on average.

"As projections of global growth have been slashed dramatically recently, we need to remain conscious of the huge uncertainties about how the decline in global trade affects the domestic sectors of emerging economies," says Bart van Ark, Vice President and Chief Economist of The Conference Board. "The internal dynamics of growth created by the millions of consumers in these countries, who have a job or are able to find a job, even in a slowing economy, will continue to generate positive growth." His analysis appears in StraightTalk, a newsletter designed exclusively for members of The Conference Board global business network.

MODEST RECOVERY IN THE U.S. REMAINS LIKELY

Real GDP in the United States is forecasted to fall by -5.9% on an annual rate during the first quarter of 2009, signaling a deep point in the recession. Some better numbers are beginning to emerge. The Conference Board Leading Economic Index and Consumer Confidence Index suggest that the recession will not intensify further. The decline in real consumer spending has leveled off a little. Retail sales, excluding cars and car parts, rose by .7% in February, and some turns in the measures of home sales and prices were also recorded. The Conference Board projects that growth in the second quarter will stay negative and will be very slow in the third quarter, as capital spending will remain low and inventories will not be depleted until year's end. Overall industrial production is also unlikely to move up before the fall. Even the recovery in the fourth quarter will be held back by these negative trends and increased unemployment, which is typically a lagging indicator.

The U.S. may see a contraction in real GDP of -2.6% in 2009 - the largest annual decline since 1946. Nominal output (the value of output that also reflects price change) may actually fall at more than 4%, as disinflation is much more likely in the short run than inflation.

RISK OF A "DOUBLE-DIP" RECESSION

Back-to-back recessions, as occurred between 1980 and 1982 when the economy endured a systemic crisis rather than a regular recessionary period, are a potential risk at this time. Recent increases in commodity prices, on the back of monetary easing and decline in the dollar, are leading to an increase in inflation expectations.

"If the United States experiences a too rapid recovery, there may be a risk of another recession in 2010," cautions Van Ark. "It may fuel expectations for a return to inflation, adding to the uncertainty concerning the pattern and path of economic recovery."

The likelihood of this happening is small as there are three substantial differences between the current crisis and that of the early 1980s: 1) Inflation was the concern then; now the possibility of deflation for the short and medium term is a greater threat. 2) The 1980s crisis was related to a structural transformation of the model of production in the U.S., moving from a manufacturing to a services economy; the current crisis was largely sparked by overleveraged balance sheets and global imbalances in consumption and savings. 3) This time we have massive governmental intervention intended to prevent economic activity from declining even further and stem the rise in unemployment.

LARGE DISCREPANCIES BETWEEN ADVANCED AND EMERGING ECONOMIES

The Conference Board argues that the divergence in growth performance between advanced and emerging economies will create a major challenge to rebalancing the world economy toward a more manageable global distribution of production, consumption and trade in goods and services.

The economies of commodity-producing countries - such as Russia and Brazil - have been producing bad results due to falling energy and commodity prices. China and India are the best bets to limit the global output collapse in 2009. China's export growth engine is under serious stress and the consumer sector will surely be affected by the decline in employment opportunities.

But the internal dynamics of growth created by the millions of consumers who still have a job or are able to find one in a slowing economy will continue to generate positive growth in China. Even though much of the U.S. $586 billion stimulus is likely to have already been baked into the government's investment plans, it may help keep China's growth rate at about 7.5% for 2009, says van Ark.

In India, as well as in several other large economies in the developing world that are somewhat less exposed to the global storm, the impact of the collapse in financial markets on fourth quarter GDP may have done a less lasting damage to the potential for growth this year.

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House Bill Aims to Stabilize Housing, Addresses Foreclosure and Stimulus

A bill that embraces the need for righting the housing market --- the first big step toward economic recovery --- was introduced Friday in the U.S. House of Representatives.

H.R. 384, The TARP Reform and Accountability Act, was offered by Rep. Barney Frank (D-Mass.), chair of the House Financial Services Committee. The bill would require the Treasury Department to develop a program, outside the Troubled Asset Relief Program, to stimulate demand for home purchases and lower property inventories, by making affordable mortgages available for qualified buyers through interest rate buydowns, a priority of the National Association of Realtors.

The measure would amend the TARP provisions of the Emergency Economic Stabilization Act of 2008 to make significant steps to reduce foreclosures, strengthen accountability and close loopholes. Treasury could consider the impact of areas with the highest inventories of foreclosed properties.

NAR President Charles McMillan was heartened by the legislation that would move the housing market forward. "The bill proposed by Chairman Frank is an important first step toward launching a real estate recovery. Housing has always led this country out of economic downturns, and this bill recognizes that the key to bolstering the overall economy is creating stability in the real estate markets. With foreclosure relief, improving the Hope for Homeowners Plan, and expanding TARP to support commercial real estate loans and commercial mortgage-backed securities, this legislation will help create housing stability."

"By directing the Treasury Department to increase the availability of affordable mortgages rates for qualified home buyers and to offer reduced rate loans designed to stimulate demand for home purchases and clear inventory of properties, Chairman Frank has responded to the most critical issues facing potential homeowners," McMillan said.

Foreclosure relief, using the second half of the $700 billion previously authorized by Congress, would be conditioned on stipulation that $50 billion be used for foreclosure mitigation and calls for a plan to be put into action by March 15. That would allow the Treasury to begin committing the remaining TARP funds for the plan no later than April 1.

The plan would require that foreclosure assistance must apply only to owner-occupied residences. Further, the bill would provide liability protection for loan servicers who engage in loan modifications. Such servicers would have to report regularly to the Treasury.

In addition, the Treasury would be authorized to provide support for commercial real estate loans and commercial mortgage-backed securities, an NAR priority.

NAR has been urging the incoming Obama administration, as well as Congress, to address critical housing needs. "This legislation is a great beginning, but more needs to be done. We must continue to bring potential homebuyers into the market by ensuring low mortgage interest rates, making the higher 2008 conforming loan limits permanent, and applying the $7,500 tax credit to all homebuyers and making it non-repayable," McMillan said.

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