Recovery from the Foreclosure Crisis will Take Time
Since the recession has been so intense and deep, recovery too from the crisis will take time. The first indication would be job generation. Without jobs any talk about recovery would be futile. The people must have money in their pockets to spend and thus generate demand. Secondly prices in the housing sector would have to stabilize allowing lenders to become more confident about advancing loans for purchasing houses.
Confidence of the consumers is vital for the economy. The shock has made most people turn to saving their money rather than splurging on credit cards. But economists are hopeful that people would start using their wallets again and not put everything in the piggy bank. Dennis Jacobe of Gallup said, “There’s a changed attitude toward debt and spending. Consumers need to feel more secure financially.”
In surveys of 2009 Gallup noted the discretionary spending dropped by 20% to 30% from the levels of 2008. Jacobe thinks that this will continue till the middle of 2010 when thing will improve. It is not good news for the retailers.
2010 will continue to be a year of difficult credit. Bill Hardekopf of LowCards.com who has co-authored The Credit Card Guidebook, said, “The thresholds of good credit and excellent credit – those bars have been raised. In 2009 credit was darn tight, and it will be just as tight in 2010.”
There is hope that 2010 will see the emergence of small and medium sized enterprises. With consumers keeping their hands inside their pockets the small traders like those operating eateries, dry cleaners and small shops see no need to hire new workers and stretch out. But generally it is they who would be providing the new jobs in the country – as they always have been doing without much hue and cry. It is they who have to be helped back on their tracks.
William Dunkelberg of National Federation of Independent Business (NFIB) predicted that the running year would be a “subpar” year for small business concerns. The growth would be below 3%. He said, “NFIB surveys (of its members) show hiring plans and capital spending plans at 35-year lows. With no customers, you don’t need inventory, you don’t need delivery trucks, you don’t need to add to the payroll.”
The future prospects of the construction sector continue to be bleak. Spending on this sector is expected to drop by 5% this year. Money coming from stimulus package is not sufficient to bring it back to the pre-recession mood.
Washington is continuing to help but this has become a contentious issue between the two parties. This does not bode well for the economy and the nation.
