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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

 

When are you people going to realize that Obama/Bush are just talking heads. The real damage is done by the likes of Pelosi, Reid, Kerry, Murtha and so on, but the sad news is that you people keep electing them over and over again.

Get a little education, read the book Atlas Shrugged (written in 1957) and see what happens when the goverment takes over everything and the "capitalists" give up and walk away. No one left to tax, no one left to create jobs, no one left to steal (tax) money from.

Keep electing the same clowns (both Dems and Reps) and watch this great country turn into a 3rd world economy and we'll all have to learn Chinese to pay off the debt. Oh and by the way this all started with Clinton and if you don't believe me read the article in the NYT (yes the Times) from 1997 that foretold of the disaster of creating and mandating "sub-prime" loans.

The 'recovery' isn't in jeopardy since same never existed.  Almost nine millions (probably more) unemployed, Chrysler in Chapter 11 with GM soon to follow, which will translate into more out of work.  These will be people w/o cash to fund a recovery.  And all this BEFORE inflation, which is inevitable, due to printing  money by this administration.

No need to call people names furious1

Rich, I could not have said it better myself. People have to get together everywhere at the local level and take an active part in helping fix this mess. Pick an issue and drive it to completion. Take ownership of the multitude of issues in your home towns. Stop waiting for a politician to fix the problems we all helped create. Government is only as good as the people it governs, remember that.

Obama is to blame..as a Senator he voted for most of this crap.  And without greedy companies...the government deficite would be even greater...where do you think the tax money comes from?  the Middle class? the poor? ..last time I looked a guy making 35K paid non and got a couple K back....

Obama can spin it any way he wants, but socialism never worked, never will.  He is just scaring the markets and investors, which will hurt commont folks most.

People  will eventually see that the king has no clothes, but by that time the pain will be hard to bear.

Wake up people and smell the roses!

mikes

another 600k people lost thier jobs last week..and there is a recovery going on!

Since he has bee elected..the stock market lost close to 6000 points..home values have been decimated ,the car companies are devastated,banks have been taken over by someone that did not pay his federal taxes,401k's have lost nearly 50% of their value..The chosen one has Kobe beef and cocktail parties every Wednesday..and on Earth Day he burns 9000 gallons of jet fuel to fly to a town meeting in Missouri

with his cronies,and if he did not have two teleprompters to read off of..he would be a stuttering idiot...there is a crisis every week..only to be solved the the administration...and now..we are being told that Social Security and Medicare face insolvency if we do not hand over the health care system to him ..

but as we all know it is George Bush's fault...

let the recovery begin!!

Here's hoping the economy absolutely crumbles. The US was never going to last forever. Read some history books. How many Romans do you see today. I am hoping that things collapse in my lifetime so I can be around to see what the new world will bring. Or I would love to go out fighting the good fight, how exciting!    

Stop trying to assign blame for the mess.  What we need to focus on what corrects the problem.  If careless spending and foolish borrowing of funds got us in trouble by bankers, investors, etc why is the goverenment doing the same going to solve the problem?  We should be having open discussions on what we are going to do. Not just the President, but Congress and we the taxpayers.  I bet if we gave the problem to our top Universities they would come up with a solution.

I am originally from the UK, have lived in the USA for 20 years, and have recently become an American citizen. I wanted to address the comments about healthcare in this country.

Having seen health care from both sides of the pond, I support a universal Government run health care system. A basic insurance for everyone which, by the way is very well run in the UK, would be a great idea. Yes, it is Government run, but it's no worse that being dictated to by the HMO's in this country,  who are mostly only looking at health care as a business. They don't look out for the patient. Yes, there are sometimes waiting lists for minor surgeries or to see a specialist, but at that point, if you have the means, you can pay to have private care which puts you at the head of the line.

In the meantime, this tiered system  ensures that everyone has some coverage and if you need treatment for serious illnesses, the care is above and beyond.      

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