This appeared some time back in April-2008. What is interesting to note is that not only this chart is visually appealing but it does pack a lot of data. The color of the stacks shows the % of subprime mortgaes as a % of all mortgages in an area while the height of a stack shows subprimes mortgages foreclosed as a % of all subprime mortgages in that area. If you look at the bottom of the chart, one can hazard a guess that areas that showed the highest construction activity had lower rates of unemployment but when the crisis hit, to some extent also had to suffer the most.
Although one may argue that the foreclosure rates might have gone up in the months since this graph was created, but I don’t think the subprime crisis single handedly has the potential to drive the US economy in to a prolonged recession. (* Coupled with the negative household savings rate and oil prices, it MAY). Assume that the peak % share of subprime mortgages in the overall market is around 10%. And even in that, 10% of the subprime mortgages undergo a foreclosure. Combines, that effectiveley puts 10% x 10% = 1% of the entire US mortgage market under risk. (Bearing in mind that a foreclosure is not a complete write-off, there is always a salvage value (=physical value of the house) which even in the foreseeable scenario may not go below 50%-60% of the mortgage value). So in a worst case scenario, we may assume that the US capital market loses 0.5% (50% of 1%) of its capital base due to the crisis. That would essentially wipe off $ 400 billion from the system (Assuming that the size of the entire pool of mortgagesis around $ 8 trillion. (Source www.bis.org) 2005 estimates). Now that is a big figure to write-off by any standard, something which can send smaller economies into a tailspin, but for US it’s not something that the economy can not take.
So yes, the mortgage crisis is big and it is going to be painful but no, the US economy will bounce back.