Across the U.S., Long Recovery Looks Like Recession
Posted by easysavingmoneytips on October 28, 2010
Across the U.S., Long Recovery Looks Like Recession
Don’t’ feel like we are in an economic recovery yet, you are not alone. Millions, tens of millions of Americans feel the same way, very little change; people are still losing their homes, and credit card delinquencies are still on the rise. According to the Bureau of Labor Statistics, in September, employers took 1,486 mass layoff actions involving 133,379 workers, the highest since the great depression. As you forge ahead, economists warn of a possible double-dip recovery toward the end of 2011, until than only a band-aid to cover our economic wounds. Michael Powell and Motoko Rich give us a little more insight about the Long Recovery looking more like a Recession across America. Bob Willis in his October 15 2010 report at Bloomberg.com also gives us some facts about the economy. We still have a long road ahead of us; using money saving tips will help us through the rest of this economic recovery. Also see Fabulous Freebies 2010 by Erin Burt
This is not what a recovery is supposed to look like
In Atlanta, the Bank of America tower, the tallest in the Southeast, is nearly a fifth vacant, and bank officials just wrestled a rent cut from the developer. In Cherry Hill, N.J., 10 percent of the houses on the market are so-called short sales, in which sellers ask for less than they owe lenders. And in Arizona, in sun-blasted desert subdivisions, owners speak of hours cut, jobs lost and meals at soup kitchens
Less than a month before November elections, the United States is mired in a grim New Normal that could last for years. That has policy makers, particularly the Federal Reserve, considering a range of ever more extreme measures, as noted in the minutes of its last meeting, released Tuesday. Call it recession or recovery, for tens of millions of Americans, there’s little difference
Born of a record financial collapse, this recession has been more severe than any since the Great Depression and has left an enormous oversupply of houses and office buildings and crippling debt. The decision last week by leading mortgage lenders to freeze foreclosures, and calls for a national moratorium, could cast a long shadow of uncertainty over banks and the housing market. Put simply, the national economy has fallen so far that it could take years to climb back.
The math yields somber conclusions, with implications not just for this autumn’s elections but also — barring a policy surprise or economic upturn — for 2012 as well:
• At the current rate of job creation, the nation would need nine more years to recapture the jobs lost during the recession. And that doesn’t even account for five million or six million jobs needed in that time to keep pace with an expanding population. Even top Obama officials concede the unemployment rate could climb higher still.
• Median house prices have dropped 20 percent since 2005. Given an inflation rate of about 2 percent — a common forecast — it would take 13 years for housing prices to climb back to their peak, according to Allen L. Sinai, chief global economist at the consulting firm Decision Economics
• Commercial vacancies are soaring, and it could take a decade to absorb the excess in many of the largest cities. The vacancy rate, as of the end of June, stands at 21.4 percent in Phoenix, 19.7 percent in Las Vegas, 18.3 in Dallas/Fort Worth and 17.3 percent in Atlanta, in each case higher than last year, according to the data firm CoStar Group.
Demand is inert. Consumer confidence has tumbled as many are afraid or unable to spend. Families are still paying off — or walking away from — debt. Mark Zandi, chief economist of Moody’s Analytics, estimates it will be the end of 2011 before the amount of income that households pay in interest recedes to levels seen before the run-up. Credit card delinquencies are rising.
“No wonder Americans are pessimistic and unhappy,” said Mr. Sinai. “The only way we are going to get in gear is to face up to the reality that we are entering a period of austerity.”
This dreary accounting should not suggest a nation without strengths. Unemployment rates have come down from their peaks in swaths of the United States, from Vermont to Minnesota to Wisconsin. Port traffic has increased, and employers have created an average of 68,111 jobs a month this year.
After plummeting in 2009, the stock market has spiraled up, buoying retirement accounts and perhaps the spirits of middle-class Americans. As a measure of economic health, though, that gain is overstated. Robert Reich, the former labor secretary, notes that the most profitable companies in the domestic stock indexes generate about 40 percent of their revenue from abroad
Few doubt the American economy remains capable of electrifying growth, but few expect that any time soon. “We still have a lot of strengths, from a culture of entrepreneurship and venture capitalism, to flexible labor markets and attracting immigrants,” said Barry Eichengreen, an economist at the University of California, Berkeley. “But we’re going to be living with the overhang of our financial and debt problems for a long, long time to come.”
New shocks could push the nation into another recession or deflation. “We are in a situation where our vulnerability to any new problem is great,” said Carmen M. Reinhart, a professor of economics at the University of Maryland.
So troubles ripple outward, as lost jobs, unsold houses and empty offices weigh down the economy and upend lives. Struggles in Arizona, New Jersey and Georgia echo broadly.
Bob Willis, October 15, 2010 Bloomberg.com report. A few important things in Bob Willis report is, unemployment is stuck at a near 26 year high will bring recovery to a halt. An unexpected decline in consumer confidence was a reminder that a jobless rate forecast to exceed 9% through next year, will curb spending accounts for 70% of the economy. Federal Reserve Chairman Ben S. Bernanke said “recovery may need additional momentary stimulus because inflation is to low and too many Americans are still out of work”.
Consistent with Bernanke’s message, john Herrmann, senior fixed income strategist at State Street Global Market LLC in Boston said “The consumer and the economy are still in need of support, as private job creation is insufficient to cause a material improvement in the unemployment rate and in consumer confidence”.
The smaller than forecasted increase in the cost of living highlights Bernanke’s concerns that inflation is falling short of the Fed’s goals, raising borrowers cost in real terms.
Bernanke also said “Consumer spending has been inhabited by the painful slow recovery in the labor market, which has restrained growth in wage income and has raised uncertainty about job security and employment prospects.