MBA backs Bush's growth plan
March 11, 2003
Says package could create 1 million jobs by end of next year
Inman News Features
The Bush Administration's proposed economic growth plan shows that the package could create 1 million jobs be the end of 2004, according to the Mortgage Bankers Association of America's economic report released today.
In addition, MBA's analysis shows that the proposed plan would boost the nation's Gross Domestic Product (GDP) by an additional 0.5 percent this year and 0.9 percent in 2004.
MBA Chief Economist Doug Duncan said that given the short-term and long-term stimulus effects of the President's plan, the association is strongly urging action on the package.
"We see the jobs growth in the package as being vital to single-family, multifamily and commercial real estate," Duncan said. "These are the jobs we need to fill the vacancies in existing apartments and office buildings."
Duncan also pointed out that the interest rate increases resulting from the economic growth in this package are small enough that housing starts won't be harmed. He said MBA even sees an increase over the 1.7 million starts it was forecasting for mid-2003 through 2004.
Another key aspect of the President's plan is that the tax cuts are permanent rather than temporary rebates, according to Duncan. He said that while estimates from previous tax cuts are that individuals spend only about one-fifth of funds received, spending from permanent tax cuts runs closer to two-thirds of the increase in disposable income, "and it's that spending that will help get the economy moving again."
MBA estimated that the effect on interest rates would depend on how the Federal Reserve Board reacts to the impact of the growth plan on the economy. "Given the currently very low rate of inflation, it is unlikely the Fed would rush to raise interest rates at the first sign of improved economic growth," Duncan said. "From the middle of this year onward, however, the economy could be growing at a pace that reduces unemployment significantly."
Washington, D.C.-based MBA is the national association representing the real estate finance industry.
Copyright: Inman News Service