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Is economic recovery in jeopardy?

Posted May 14 2009, 10:18 AM by Andrew Rosenbaum
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What happened to our economic recovery? Recovery was supposed to be right around the corner, right?

The Federal Reserve and Treasury Secretary Timothy Geithner keep telling us that things will definitely get better soon -- the Fed says growth should start in the third quarter of this year.

But the most important indicators of that recovery are going in the wrong direction. Retail sales are down. The housing market is stagnant. Mortgage rates have moved higher.

Where are those "green shoots" of recovery that Fed Chairman Ben Bernanke is always talking about? Have they gone brown?

That phrase about "green shoots" actually comes from Bernanke's March 15 interview on "60 Minutes."

And since that interview, the phrase has been picked up by economists and analysts all over the world. (Try a search on the term and see how many references you get.) 

But today, the green shoots aren't flourishing anymore, and it’s looking like the recovery may genuinely be in danger.

  • Retail sales dropped 0.4% in April, according to a Commerce Department report.  They had been up about 1% in January and in February, and that was one of those green shoots that everyone was talking about.
  • Home foreclosures were up 32% in April from the same month in 2008. This has placed a glut of houses on the market, keeping home prices down. The Case-Shiller Index of housing prices in 20 cities showed an 18.6% drop in February from the same month in the previous year.
  • Consumer sentiment is still close to record lows. The Reuters/University of Michigan Consumer Sentiment Index is still 33% below pre-recession levels. "Consumers' expectations for their financial situation are dismal," warned Richard Curtin, the survey's director.
  • Mortgage rates have gone back up over 5%. The number of mortgage applications is decreasing.  

So is a recovery in jeopardy? The outlook is grim, but it’s not without hope. The cost of borrowing money has gone down and banks are trying, although without much success, to lend more.

After the stress tests, fears for the future of the nation's banks have eased. There is little danger of another huge financial disaster sending the stock market through the floor and causing the international credit system to freeze up as it did in 2008.

But we probably shouldn't expect recovery to be just around the bend. There are a few green shoots, but they ain't poppin' out all over. 

You might want to keep an eye out for them after the summer.

Comments

 

The way to start repairing the economy and reducing unemployment is to repair the immigration issues.  I am a US citizen that has lived and worked in Mexico.  I was required to do all of the things the illegal aliens in this country are supposed to be doing.  All we have to do is give each of the illegal aliens a lump sum of money, say $10,000, to go back home.  This is far less than we will spend on food stamps, health care, and other gov't funded programs.  This also gives them a start in their homeland and a boost to it's economy.  We then have to fill a lot of jobs to secure our borders and fill the empty slots left by illegal aliens leaving their jobs.

Susan perhaps you need to talk to your doctor as both of mine are retiring as soon as the "socialized" medicine comes to play. Every doctor that I talk to says why am I going to waste 6~8 years of college, continuing eductation to improve my skills only to have the government tell me that I can only make $50,000 per year.

If it's so good why do all the "high risk" operations/patients from Canada come to the US for health care? Why in Canada does it take an average of 6 weeks for a woman to get a mammogram? In that time period she could be riddled with cancer. Government doesn't do anything good except the military and only when the keep the politicians out of their business.

I agree with Donald. Starting in July we get our hours cut. That doesn't sound like everything is turning around

And as long as you keep blathering this negativity the consumer sentiment will stay at a low...

Study history, look at other nations---like the awful health care mess in Canada

and Great Britain...plus  the question? of "organizing" communities and dictating corporate and financial policy ....all with governement oversight and some government ownership. Now they've started dictating policy to our governor's and ursurping states rights.    OK, so history probably itns't taught like it was years ago....but the lessons are still there.  Study up and speak up!  Freedoms are at stake!  Pay attention!----yes, lots has happened in this 100 days...and not all of it is "for We, the people".  

We have already crossed the threshold into Solcialism.  The government has taken over the Car Mfg.,and the banks ad now they want Socialized medicine which has not worked anyplace it has been tried.  The Repuiblicans are now beginning to talk like Democrats in wondering if they should be more like them; when all they have to do is wait until this mess in DC blows up in their face.  The government doesn't want the money that is being paid back thyey want to give it to other banks.  Apparently they want to bankrupt every citizen in our Country.  Cut the size of Government, reinstate free enterpise, and our Freedom, and and save our Democracy.  Once our Freedom is gone it will never return.

The most prevalent refrain on this and other blogs, and perpetuated by Obama, is "we inherited this from Bush".

The recession, yes he inherited.

The national debt has been perpetrated by every President and Congress since LBJ.  We have ONE YEAR (under Wily Bill) where the debt did not increase.  And that was actually generated because of the tax receipts from the tech bubble.

I sincerely doubt we have the financial resources to every pay down the debt.  We certainly don't have the gumption to do it.  Every politician is faced with one of three choices every year:

  1)  Raise taxes, and be voted out

  2)  Cut spending, and be voted out

  3)  Borrow money, and put off the pain for another year

We know what they have chosen for 40 years running.

The only people that have been claiming that the market is turning around are the so called “professionals” that write these articles. Of course, the next day when there is a small sign of change they quickly reverse their argument and see Doomsday. Obama has been trying to inspire some hope. He has not claimed that the market is turning around now he has just said if we work together we can make it so.  

Yes President Obama is not what all his supporters think he is. President Obama is a radical, left-wing Socialist but he is a politician first and foremost. Supporters, he will break your hearts, opponents he is your worst nightmare and he is not good for our Nation. People who unreasonably hated President Bush and President Reagan go to the other extreme when they have a Democratic President. Come on people put aside your partisanship and look at what President Obama is doing and saying and then ask yourself "is that what I voted for"?

The majority of the economic data is pulled from participating industries and business that only make up roughly about 40% of the country. This makes those reports not 100% true.

The rest of you? YES we need to be paitent but we also need to not blame so much on Obama when the republicans are too worried about taking back the white house in 2012 instead of helping Obama fix the mess. Hes open to there ideas and sugesstions but all the GOP wants to do is critizice. Definately not going to help them in 2012. Might just take them completely out of the picture.

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