Tackling the Foreclosure Triggered Recession with Spending
Some pundits opine that the one of the ways of tackling the foreclosure-triggered recession is to start spending – that is spending a little. This will give signals to the economy that the consumer has confidence and things will start pushing forward. If everyone holed up in basements and started living on tinned sardines and tap water the recession could get worse. It is ultimately the mood of the consumer that boosts or depresses the fiscal market and as such a little bit of Christmas shopping and exchange of gifts will do more good than harm.
Officially America is in recession and there is the fear that it could get worse. The ordinary citizen tends to get confused hearing and reading about the global crisis. The politicians in Washington are sending out all sorts of signals that are confusing many. There are stimulus plans coupled with bailout packages as well as emergency loans. What to look for where? The media is constantly making hysterical comparisons with previous years and hammering in astronomical numbers about unemployment, foreclosures, foreclosure rates and bank collapses.
There is however grave cause for concern. According to the National Bureau for Economic Research (NBER) America is in recession since December 2007. Economists coming form non-profit independent groups opine that recession will continue for quite sometime considering the many shocks the economy has suffered. It will be worse and longer than the days following World War II.
Manufacturing is badly hit and the housing market is in ruins. In this year 1.7 million jobs have vanished and the unemployment rate has gone up to 6.7%. In the Inland Empire it as bad as 9.5%. Although it is still a far cry from the days of the Great Depression it is still worrying. For the 11th running month employers have sliced jobs. Jeffrey Frankley of NBER speaking about the recession commented that it is clear that the recession is not to close within few months. He added, “We would be lucky to get done with it in the middle of next year.”
Fed upon this type of information it is natural to get more depressed and shrink into a hole cutting down on everything. But America’s economy is dependent on the confidence of the consumer. The spending by the consumer provides two thirds of the fuel for the country’s fiscal engines. So a little loosening of the slim purse strings will go a long way in boosting hope again during these bleak foreclosed days.
