Do YOU Think the Recession Is Over?

Recession or Recovery

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in General

How is the economy in your corner of the world?

We’re hearing and reading much these days about the improving economy—the stock market has climbed over 50% since it’s low point in March of 2009, banks are becoming profitable and it looks as if the worst is over for housing and on the job front.

At least that’s what statistics are indicating, and while statistics are useful, they aren’t exactly real life. So the Big Question: Is this a statistical recovery or a real one?

A curious, but hardly surprising article appeared on Yahoo Finance this week For many, recovery means lower expectations (AP, June 6, 2010) taking a close look at what the recovery means to ordinary people. The overall tone of the article is most definitely slanted to the negative, highlighting continued employment problems forcing people to lower their expectations for the future. Is there any truth to this assertion in light of statistical data pointing toward recovery? Perhaps.

Mark Twain wrote that there are three kinds of lies: lies, damn lies and statistics.

With that in mind, let’s play a little game. Let’s pretend that statistics are meaningless, and seek out some anecdotal evidence—from YOU! What’s your take on the recovery?

I’ll get the discussion going by honing in on eight areas of the economy that were either acutely affected by the recession, or that represent viable markers confirming that the recovery has taken hold.

Housing. The Great Recession began with real estate, and perhaps no sector was harder hit. Housing sales, new construction, mortgage lending, real estate related services all fell hard. But where are we at today?

  • How bad has the housing market in your area fared since 2006?
  • Has there been an increase in new construction in your area in the past few months?
  • Were you trying to sell your home during the recession? How did that go?
  • Does it seem any easier to sell a house in the past six months or so?
  • Are you planning to buy a house in the next 12 months? Do you know others who are?

Jobs. In the early days of the downturn, employment seemed to resist the economic tide. But when jobs did finally begin following the economy down, the unemployment rate moved up with frightening speed. Opportunities to advance, either through promotions or through new positions at other companies came to a standstill. And now that recovery is being reported, the unemployment rate remains in the high nine percent range, or right about where it was six months ago.

  • How is your job going now?
  • Are you facing the prospect of a layoff, or does it look like conditions have stabilized?
  • Are the unemployed in your area finding jobs? Are those jobs comparable in compensation to what they had previously?
  • Have you been promoted in the past year, or do you expect to in the next few months? Do you know others who have?

Small businesses. One of the surest signs of economic recovery is a surge in new small businesses. As the recession began taking hold, storefronts and offices closed up faster than jobs disappeared. Where I live, in suburban Atlanta, shopping centers and office buildings with vacancy rates in excess of 50% are hardly unusual, and the closures are continuing.

  • Are you getting a surge of new businesses opening in your area?
  • Were you forced to close your business since the recession began?
  • Are you opening a new business right now? Or do you know others who are?
  • If you were to open a new business now, what would it be?

Cars. Car sales seemed to do somewhat better than housing in the depth of the downturn, but not so much better that bailouts and a bouncing incentive credit program didn’t have to be put in place to avoid an alleged collapse. But if there is a visible barometer of economic improvement, it would be car sales. When people feel better about the economy and their own prospects in it, thoughts turn to new cars. And sales are up, albeit from very low levels.

  • Have you bought a new vehicle in the past six months? How many people do you know who have?
  • Did you take advantage of the new car credit? Would you have purchased the car if the credit wasn’t available?
  • Are you planning on buying a new vehicle in the next six months? How many people do you know who expect to do the same?
  • Have you sworn off buying new cars in favor of buying used?

Vacations and travel. Prior to 2007 the travel industry was seen as one of the economy’s bright spots. But the recession in combination with high fuel prices toppled that notion. Are people suddenly traveling more, or will this be a trailing indicator?

  • Are you traveling more or less in 2010 than you have in the past few years?
  • Are you moving ahead with vacation plans, or are you holding back to see what happens?
  • Are people in your social orbit traveling more in 2010 than they have in the past few years?
  • Have you seen evidence that business travel is on the upswing?

Stock Market. The market collapse that dropped the Dow Jones Industrial Average from 14,000-plus down to the 6500 level in a space of less than 18 months is now history, as may be the 12 month recovery that brought it back up to the 10,000 level. Where it goes from here is anyone’s guess, but the stock market is a widely regarded leading indicator of the future direction of the economy. From a statistical standpoint, this indicator is almost irrefutably flashing recovery.

  • Have your stocks largely recovered from the 2007-09 plunge?
  • Did you sit out either the plunge, or the subsequent recovery?
  • Do you know anyone who’s ahead on the market since the beginning of 2007?
  • Have you become more aggressive with your investments in the past few months? Or do you plan to in the future?
  • Do you think the advance that began in March of 2009 has a long way to go, or do you think the market is huffing and puffing already?

Credit. Beginning with sub-prime mortgages, then crawling its way through virtually the entire credit granting universe, a credit freeze brought lending to a virtual standstill for at least a year. Compared to the zero down financing for houses and cars and mailboxes full of credit card pre-approvals world of 2006, how do things look for credit now?

  • Did you have any credit lines or home equity lines of credit (HELOCs) closed or reduced during the height of the credit crisis?
  • Have you obtained new credit in the past 12 months? Was it difficult to get?
  • Do you think we’ll ever get back to the easy credit of 2006? Do you even think we should?

Future expectations. Of course, this isn’t a tangible economic factor, but how we view future financial mobility says a lot about our view of economic conditions. Take a stab at these”¦

  • Are you less hesitant to spend money now than you were a year or two ago?
  • Are you financially better off now than you were a year ago?
  • Do you expect to be better off one year from now than you are right now?
  • How is your financial situation now compared to 2006?
  • Five years from now, do you expect your financial situation to be better, worse, or about the same as it is now?

Pick any one topic or any group of topics, and weigh in with your opinion. Based on what you’re seeing and experiencing in your area or business, is the economy improving, declining or bumping on the bottom?

Kevin At Out of Your RutThis post is from FiscalGeek staff writer: Kevin Mercadante. I’m very excited to have him contributing to the site. You can find out more about him at his own blog OutOfYourRut.com.

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2010/06/17 at 4:35 pm

{ 12 comments… read them below or add one }

Spedie 2010/06/08 at 10:44 am

I’d like to comment on Housing. I live in the western suburbs of St. Louis, MO. Months ago I noticed “We buy ugly houses” advertising on billboards again after a long break. I am now seeing smaller signs by other outfits. Homes that sat on the market for months that didn’t sell and the owners gave up are now selling. I’ve seen a half dozen homes in my neighborhood sell in 3 weeks or less.

I’d also like to comment on jobs. My husband just found work after being unemployed for awhile. Others that I know are also finding jobs. I didn’t have any problem finding a job within 3 weeks of getting laid off and I got laid off twice during the recessing.

My stocks continue to do badly.

I don’t get credit offers in the mail – I stopped that annoying junk mail years ago.

I swore off buying new vehicles 3 years ago and my paid for 2007 car and truck are doing just fine with no payment book dragging along behind them!

Reply

kevin 2010/06/08 at 10:50 am

Spedie – I have to agree on your take on housing. We’re not anything like booming around here, but there’s less inventory than a year ago (maybe a lot of people pulled their houses of the market too) and we’ve got some subdivisions that were abandoned by builders a couple of years ago reviving and building.

Noticeable too is that the houses being built are a lot less expensive than 2-3 years ago. One tract accross the street was selling in the high 400s three years ago, and has reopened in the mid-300s. That’s probably why they couldn’t sell any of the properties before. Now that prices have dropped we’re seeing some activity.

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Jenna 2010/06/08 at 1:25 pm

Interesting… I’m trying to get out of suburbia and therefore haven’t payed attention to local house prices. But I’ll look into it next time I see one…

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Jenna 2010/06/08 at 12:31 pm

I’d like to comment on the housing topic:
* Has there been an increase in new construction in your area in the past few months? Yes, for street updates and repairs. But I feel as though that is all state / federal tax money going to help out construction workers who need work. That who jump starting the economy deal.
* Are you planning to buy a house in the next 12 months? Do you know others who are? Yes, both my mom and I are looking to buy houses by the end of 2010, ideally some of those nice foreclosed homes.

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kevin 2010/06/08 at 12:52 pm

Jenna – Same in my social orbit. The few who are buying are looking at foreclosures. One already has bought a foreclosure and made a real deal on it. I don’t know many–actually any–who are looking to buy “off the shelf” so to speak. But at least now there are the foreclosure buyers; not a normal market by any means, but two years ago there weren’t even many of those.

Conversely, I know a few people looking to sell homes, and not having much luck. One friend just sold a condo, but it took over a year and a half to sell it, and when it did finally close, the price was well below what it was bought for a decade ago.

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James 2010/06/08 at 1:00 pm

bumping on the bottom and will be there for the next year or so.

the stock markets are up but that is a false increase since the government pumped so much money into the economy.

mortgages are still going to default – since people got into ARMs at all different times as they expire so will some of the homes and they will go into foreclosure.

Jobs are down and will be for awhile since most of the increase has been from the census workers and part time employees

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Norman 2010/06/09 at 8:50 am

I think people will continue to hold back on their spending. They will loosen up a bit, but not to the point where they are spending freely. When the unemployed start finding jobs again, it will take them a while to get back on their feet. After about 2 years of flat/very low growth, I think we will start seeing some upswing in the economy. The wildcard is going to be our budget deficit. How long can the USA keep servicing its debt if interest rates rise? Inevitably, the rates will rise and it will take more and more of our government budget to pay the interest on the debt. The extended future is what I’m afraid of, not the near future.

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Money Smarts 2010/06/09 at 9:49 am

I think we may see a bit of an improvement from where we are now, but I can’t see how our government can maintain it’s current levels of spending, and expect to continue operating as the debt levels continue to rise. I have a bad feeling that we haven’t yet seen the worst – even if in the short term things get a bit better.

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Jerry 2010/06/13 at 8:35 am

It seems like things are getting better. At least things have been better for us. We’re getting more work and people seem less stressed. I’m happy about the healthcare plan because as freelancers we don’t have to worry about insurance now but the housing market seems to be improving and I hear about people getting jobs now. That does lead me to think there’s an overall improvement.

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Financial Bondage 2010/06/27 at 4:21 pm

I don’t think it’s over. And the government throwing $700B dollars at it did nothing. You can’t spend your way out of debt. Someone tell the Feds this..

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The prophet Re-born 2010/10/20 at 8:49 am

… Job wise things are only getting worse and will only get worse any drops in the unemployment rate are the result of people loosing their benefits due to prolonged unemployment or death as a result of poverty. I just applied for an entry level job, there were 400 applicants in 2 days just a few years ago it would have been 12-20. The real issue is that we may end up with an unemployable generation and the only way to fix this is in fact forced retirement of the elderly in higher positions in large corporations and abandoning social security now, which will most likely result in a large amount of deaths. Alternatively the complete disarmament of all American military facilities and covert military facilities located throughout the world and a surrender of non-constitutionally guaranteed powers from the executive office to congress then congress would have to reverse a great deal of executive orders from the last 50 years would allow congress to increase domestic spending nearly 3 fold without sacrificing the strength of the dollar and would increase the employability of all US citizens by removing old employment drug testing laws increasing the employable base of the 20% that are really currently unemployed as well as freeing up government money to create a significant amount of jobs about 10-20 on average for each military job lost. If we end up with an unemployable or underemployed generation there is a very high probability for the violent crime rates to skyrocket to the point that the government no longer has control of the streets in other words the revolution that the so called greatest generation should have accomplished but instead they got distracted by social security.

At any rate, I digress… the majority of why we can’t recover right now is legislation and decades of militaristic Keynesianism imposing limitations on the actions of congress and requiring them to favor the rich over the poor. Without the repeated stimulus which has only served to widen the gap between wealthy and poor we may have had a balancing out of the economy already and have had a good recovery. Without any serious actions taken to restructure American governance and society to reduce the power of the federal government the only way this situation will resolve itself is unfortunately violently.

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The prophet Re-born 2010/10/20 at 8:52 am

By the way the reason why $700B of spending didn’t do anything is that they are chasing a growing $700T gap in the derivatives market. Spending the way they are isn’t the way out after all similar spending worsened the great depression they need to make serious jobs available to all comers through the government.

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