DETROIT -- The U.S. Conference of Mayors, meeting in Detroit on Tuesday, released a report on the economic impact of the foreclosure crisis that forecasts 524,000 fewer jobs being created next year and a potential loss of $6.6 billion in tax revenues in 10 states.

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"We’ve all seen the headlines and read about how Wall Street is being impacted, but at the local level, mayors are on the frontlines everyday and our constituents are looking to us for solutions," said Detroit Mayor Kwame Kilpatrick in a news conference from the MGM Grand Hotel.

"The foreclosure crisis is no longer just about mortgages, entire neighborhoods are being negatively affected on several levels. This issue is now the number one economic challenge of many major American cities."

While the report stops short of forecasting a recession, 128 metro areas will be pushed into a “sluggish” gross metropolitan product (GMP) growth of less than 2 percent in 2008. The GMP refers to the gross domestic product for 361 metropolitan areas in the United States. The total GDP growth loss equals $166 billion, with the combined economic loss of the top 10 metro areas exceeding $45 billion.

According to the report, prepared by the financial analysis firm Global Insight, growth will be cut by more than a third in 65 metro areas and by more than a quarter in 143 metro areas. The largest metro, New York, loses over $10 billion in 2008 economic output as a result of the mortgage crisis, followed by Los Angeles ($8.3 billion), Dallas ($4.0 billion), Washington ($4.0 billion) and Chicago ($3.9 billion).

“Not that long ago economists said housing was the backbone of our economy,” said Trenton, N.J., Mayor Douglas Palmer, president of the mayor's conference meeting in Detroit. “Today the foreclosure crisis has the potential to break the back of our economy, as well as the backs of millions of American families, if we don’t do something soon. We must not let the economic numbers mask the face of this tragedy – the families who are struggling to pay their mortgages and stay in their homes,” said Palmer.

Other report findings include:

The foreclosure crisis alone will reduce home values by an additional $519 billion in 2008, bringing the total forecast of lost equity for the nation’s homeowners to $1.2 trillion.

In 2008, the economy will grow at a rate of 1.9%, a full percentage point lower than would have been the case without the mortgage crisis.

Foreclosures will increase by at least 1.4 million in 2008; these homes represent a market value of $316 billion.

In 10 states, representing a cross section of the U.S., the aggregate loss in tax revenue will equal $6.6 billion.

Home price declines across the U.S. will average 7 percent in 2008, ranging as high as 16 percent in California.

Consumer spending will slip to 2 percent growth, well below a 3.1 percent gain in incomes.

Housing starts will continue to decline until the second quarter of 2008, when the annual rate housing starts will be just 800,000, a drop of almost 20% from current levels.

Sales of existing homes also will continue to fall by another 10 percent in 2008.

Previous Stories:

• November 27, 2007: Summit In Foreclosure City
• November 18, 2007: Congressman Wants Foreclosure Moratorium
• November 1, 2007: Michigan Among Top 5 Highest Foreclosure States