Is The Recession Over?
Not an easy question to answer, but certainly we are on recovery track.
A question with hopeful answers. Recession in United states started in late 2007 and after keeping a slow pace hovered around the US by end of next year. 2008 and early 2009 was all about Foreclosures, Short Sales, Financial Institutions collapse, Bail Outs in Billions on top of accumulated Debt, Auto Industry bankruptcy, Cost Cutting and Minimal Hiring after Layoffs.
As per economists, the worst is over and market has started stabilizing but it will take its toll. Wall Street numbers are moving ahead, but it still has to catch up alot to make it all even. Companies like Apple, Ebay, Intel have outperformed and surpassed expectations in Q2 2009, resulting in Green numbers for Market. Some economists consider this Green to be more like dandelions than the crop.
It took us one and a half year to reach us here and should take almost that much time to be back to our positions. Unemployment rate should decline in the coming years, though Verizon recently announced layoffs after their Q2 earnings, as part of saving costs. California State is short on budget, so state employees layoffs are expected. But we should not forget that Federal Govt. is planning to spend on Health Care reforms and Construction work, so the situation may balance out. Foreclosures and Short sales are still around but as compared to last year, have slowed down.
Recovery won’t happen in one day. Imagine you wake up next morning, Dow, Nasdaq and S&P are up by couple of thousands in one day.Hard to imagine, and so hard to be real. The good news is atleast market is showing signs. Housing and Jobs will be the last ones to recover but let us wait for the brightest day, when Zilllow, CyberHomes and eppraisal will show houses to be floating high above water, covering all mortgage interests payments. Wall Street numbers all green with double digit percent spikes. People having multiple job offers in hand and 401Ks with double returns. Is this an unachievable dream or will it happen some day?
Whatever happened, happened. But taught us the meaning of Saving for Rainy Days and don’t let the Credit line reach your neck.Lessons have been learnt and will keep us away from another recession for atleast half a century.
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Post CommentDoug Digger Eberhardt
On July 31, 2009 at 12:22 am
Government spending does not cure a recession. It’s far from over here in the U.S.
The only thing working for GDP right now is government spending. How does adding more debt to debt cure a recession? It doesn’t.
The U.S. dollar is also key. Right now the dollar index is hovering around 79. Once it falls below 72, all bests are off. The U.S. will be in uncharted territory. The Fed will be pressed to do anything about it.
mv
On August 5, 2009 at 6:45 pm
It depends, if you invest the additional debt in productive way, it may help in shedding off the earlier debts. Declaring bankruptcy after debt is also not going to solve the problem.