It Is Difficult to Know When the Foreclosure Crisis has Peaked
Everybody wants to know the end of the story but it is difficult to know if the foreclosure crisis has peaked. The recession has now been running for 15 months. This made it one of the longest since the close of World War II. The trend shows that things are going from bad to worse. The Dow continues to fall as jobs are disappearing. One in eight house owners of America is in foreclosure or lagging behind in mortgage payments.
Previous patterns show that invariably the economy recovers as it runs in cycles. Pundits are pouring over piles of figures – many hidden by the flashing headlines. Their aim is to catch the turning point. Experts on housing, stocks and jobs were queried by the Associated Press on this matter. None of them are optimistic about clouds clearing in the near future.
The unemployment chart showed that it was 8.1% in February this year calculating to the highest in the last 25 years. 4.4 million jobs have been lost since the onset of the recession of 2007. The job losses began during the early months of 2008 as housing and construction activity began to slow down. Things became worse with the collapse of the financial world in autumn and many white-collar workers found themselves without work. The unemployment frenzy spread across divides affecting all levels of earnings. It seems darker days are ahead in the job world. Consumers are not spending and credit remains frozen. Experts opine that this year 2.4 million jobs will vanish. This will cause the unemployment rate to cross 9%. The job market will continue to limp even if the economy starts to crawl up. It will not be till 2013 that the unemployment rate will drop to the pre-recession figure of 5% according to Moody’s Economy.
Sophia Koropeckyj of Moody’s Economy is on the lookout for two signs – the hiring of temporary workers by firms and an increase in the hours of work of those who are still engaged in either full or part time jobs. When business begins to look up the first thing employers do is to hire temporary workers. Soon this is followed by the engaging of permanent workers. Koropeckyj calculates that this will not happen till the middle of 2010.
The housing crash has spread pain as never before as it has spread widely. Other housing crises had been more local in character but this one is truly national.
