The Post Foreclosure Crisis Period is Seeing a Limping Recovery
The post foreclosure crisis (presumed that the crisis is over) is seeing a limping recovery. As the fiscal year ends, economists are saying the unemployment rate is 8.4% and the prices of residential houses are negligibly up.
The financial pillars of American economy consist of employment and real estate. Both are wobbly and will stay so until well into the next year of 2011 according to a survey made of economists by the Associated Press.
The results of the survey points to a recovery alright but it will be slow and come in fits and starts in 2010. The same pattern will be repeated in 2011. Consequently the central bank will keep the interest rates hovering around zero – at lest till the last quarter of 2010. This was the opinion of three fourths of the economists.
The survey is being conducted in each quarter and includes economists in the private and corporate sectors as well as those in the academic streams. The indicators would be employment, prices of residential units as well as inflation.
The survey forecasts that unemployment rate will remain stubborn during these two years. Towards the close of the year it will crawl down to 9.3% and drop to 8.4% when the year 2011 draws to a close. Since last January it has remained at 9.7%. At the onset of the recession in 2007 December the unemployment figure was 5%.
As regards price of homes it is predicted that it would remain flat all through 2011 – it being 30% less than the peaks reached in 2006. In 2010 there would be no increase but in 2011 it will increase by 2.3%.
In 2010 the economy will see a growth of 3% – much less than the norm. It will be the early recovery phase. This is linked with the high unemployment. It requires a growth of 5% annually to decrease the unemployment rate by 1% according to the pundits in the line.
It was from the summer of 2009 that the economy had started showing signs of revival. This was 18 months after the onset of recession. The Federal Reserve will not increase interest rates till the end of this year, so as to keep the recovery running. This was the opinion of 34 out of the 44 economists that had been surveyed. This low rate is expected to give a fillip to the sale of homes.
