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Bubble, Bubble Toil and Trouble.

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Services for Real Estate Pros with Promo-Plates car nameplates by Ameri-Plates

There are those who say the housing crisis is what's holding America back from economic recovery.   To this scribe the sub-prime fiasco may have started the ball rolling back in 2007, but that's yesterday's news.   The root of what's holding us back today is unemployment and employment uncertainty.........and a nation that's pre-occupied with paying down debts rather than spending.  

Seems to me it's all a big circle.  Like the human body, everything is inter-connected.   Economists are now saying it will take a stroke of incredible good luck to get the unemployment below 8% by 2012.   From what I've read, a majority of economists believe it will be at least 2015 before unemployment falls to the historic 5% level. 

The official US unemployment rate stands at 9.5% and is expected to rise to a seasonally adjusted 10% by March, 2011.  (Keep in mind the official unemployment rate doesn't take into account the millions who have given up looking for work.)

As long as there's high unemployment and job uncertainty it seems only natural that Americans will curtail spending and place their concentration on saving and personal debt reduction.   For US corporations lack of spending is causing bankruptcies and layoffs.  Many are shifting manufacturing operations to China and India causing further unemployment.   Many of these jobs will never return.

State and municipal shortfalls caused by a decline in tax revenue will severely harm the national recovery.   US recovery is also dependent on the rest of the world resolving their economic woes.  We do live in a global village after-all.    I'm sure you can see what I mean about a "BIG CIRCLE."

You can bet the farm that President Obama has a lot on his mind as we head into November mid-term elections.  With declining popularity in government policies the Democrats have much to lose.  

There's no doubt the Republicans will make major gains in the House and Senate.   Given the deep divisions between Democrats and Republicans it's my humble opinion that nothing of any consequence will get passed by the Obama administration for the next two years.  This means two more years of government stagnation.

There's another concern on the near horizon and that's the retirement of millions of baby boomers who will withdraw from the labor force as contributors and start receiving social security and other benefits.   I can well imagine any measure designed to extend the retirement age, increase payroll deductions or reduce benefits will cause a storm of protest, but something has to be done.   And then there are those rising health costs to maintain an aging population of baby boomers who are living longer lives.

I've only scratched the surface and not touched on education, national defense, crumbling infrastructure and a raft major issues that in one way or another will touch all of us in the pocket book.  

It's going to be fun watching the debate on extending the Bush tax cuts. 

I'll leave it to you to decide how this will ultimately impact the national real estate industry in the year/years to come.  I hear that 2016 is going to be a great year for selling real estate.

Does anyone want to challenge my observations?


Comments (2)

Barbara Hensley
RE/MAX Properties - Rockwall, TX
Homes for Sale in Rockwall County, Texas

No challenge - just lots of food for thought! 

Oct 26, 2010 08:03 AM
Randy Ostrander
Lake and Lodge Realty LLC - Big Rapids, MI
Real Estate Broker, Serving Big Rapids and West Central MI

No challenge here either David. I can hope for an early recovery but you have valid points.

Oct 26, 2010 09:06 AM