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Recession or Recovery? What We Call it Doesn’t Matter

By
Services for Real Estate Pros with TheHousingGuru.com

 
 

While news stories and politicians continue to tout the “recovery,” those on Main Street remain confused. Here are just a few of the news stories that minimize the economic crisis: 

Reports of a recession have been greatly exaggerated

Don't Fear the Double-Dip Recession  

US Economy Remains in 'Recovery Phase'

 

Of course we also have the continuing saga of the European Debt Crisis, which we have been told, has already been or soon will be resolved. 

There Is No European Debt Crisis

Finally, Europe has a deal  

European debt crisis exaggerated

 

What the European leaders and wishful thinkers would like for us to believe is that Europeans are ready to blissfully accept austerity measures and to relinquish their sovereignty for the sake of their hallowed union. And while some European politicians may be ready to blindly endorse the proposals of their “leaders,” the citizenry of those countries are poised to revolt if the measures currently under consideration are implemented. Should the EU fail the effects will be felt here in the U.S. and around the world, and failure of some description seems to be inevitable. “Can kicking” is nearing the end of its ability to keep this egg together. 

A crisis in Europe will surely spread to the U.S., regardless of what politicians tell us. Europe is in deep trouble—Moody’s just downgraded Germany—Europe’s strongest major nation, and the crisis has already begun to create social unrest in both France and Spain. 

And here in the U.S. conditions aren’t much better. While politicians and the Federal Reserve have pulled out all the stops in abating disaster, their efforts have done little to help those on Main Street, for whom there has been no recovery. 

A true recovery, regardless of how sluggish it may be, should be felt by the majority of those affected; and I don’t see it. Sure, I see the stock market buoyed by a continuous stream of “free money,” and I see corporate profits at respectable levels. But to accept those as positive signs without looking beyond the numbers is to ignore the ongoing crisis in the U.S. economy. 

Pundits, politicians, and prognosticators can tell us they see signs of an improving economy and can project a recovery, but the reality is that the future of the U.S. economy is far from rosy. Additionally, it’s too complex to predict. There are just too many unknown variables with the potential to dramatically alter the end result. Those making predictions (your humble commentator included) can only make “educated” guesses as to where the economy will be at any point in the future. But for me, I can’t envision a scenario where we return to the boom times of past years. 

It doesn’t take a PhD in economics to see that the major nations, including the U.S., are treading on dangerous ground, and that dark clouds are building over our collective economic futures. Let’s look at a few facts:  

·       46% of Americans believe the U.S. has slipped back into recession.

·       June retail sales fell 0.5%, the third month to do so, and below worst case forecasts.

·       Unemployment remains painfully high, with more than 20 million unemployed.

·       Jobs creations maintain a rate well below the rate of population growth.

·       Many of the jobs being created are low wage, service sector jobs.

·       The poverty rate is on track to reach its highest level in 50 years.

·       Drought will increase food prices at a rate far above reported inflation.

·       GDP growth projections of more than 3% for 2012 have been revised downward to 2% or less.

 

Last November I posted my annual Predictions Blog, and at that time projected that there was a better than average chance that the U.S. would re-enter a recession this year. If I were to update that projection, I’d say that conditions have only worsened in the past six months. Regardless of the actual numbers touted by government, the nation’s economy continues to struggle. The reality for most is that the recession of 2008 never ended. 

Politicians like to point to Wall Street as a sign that the economy is improving; however, corporate profits, CEO bonuses, and rising stock prices don’t really translate to an improved economy for those on Main Street. It makes no difference that CEO salaries have increased; and increases in the Dow have little effect on most Americans. What we need is a surge in job creations and increases in wages that will, at least, keep pace with inflation. (And I’m not referring to the distorted inflation numbers put out by politicians and bureaucrats intent on keeping their jobs; what we need is for wages to maintain pace with the rising costs of food, fuel, housing, and medical care.)

Politicians can assure us that things are getting better, that the U.S. isn’t headed back into recession; but the reality for the “folks” is that their wallets are thin and their patience is growing thinner. Recession or recovery? How about just giving us the truth and devising a plan to return the U.S. to economic prosperity that will actually make a difference to the average American. 

 

The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s Housing News

 

"Recession or Recovery? What We Call it Doesn’t Matter" - Originally posted at: www.TheHousingGuruBlog.com 

 

 

 

 

 

 

 


 

 

 

Comments (13)

Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

I bookmarked this and will reread it after vacation.  unless the world ends before Wednesday.  You make some really great points.

Jul 29, 2012 07:59 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

I totally agree with you on this analysis.  Thank for the thoughts.

Jul 29, 2012 08:43 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

What has this administration done for housing, it just seems they could care less. They seem to want everyone dependent on the government and they have nothing to offer.

Jul 29, 2012 08:49 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Until we resolve our bond crises, we will not have a recovery. I personally follow Peter Schiff. He has great knowledge and logic pertaining to the economy.

Jul 29, 2012 11:50 AM
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

The MSM is spinning as fast as they can, but the public knows they are getting hit in the wallet. They were fooled once and hopefully won't be fooled again.

Jul 29, 2012 01:37 PM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

The growth rate is the key - 1.5% is hideous.  When you hear "we created 3.4 million jobs," you are hearing flubber.  Aside from being statistical poop, when jobs have been created, what are they?

What was the growth rate during the Depression?  You would be surprised!

And during the Bush Depression?

Ummm...

Jul 29, 2012 08:15 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Don - Thanks.

Tim - Thanks for stopping by.

Charles - And it appears that dependency is where we're headed.

Satar - Schiff certainly isn't one of the optimists.

Than - It's difficult to feel positive when there are so many negative factors hanging over us.

Jay - When you remove the effects of all the money the Fed has pumped in we're not growing at all.

Jul 29, 2012 08:38 PM
Jon Budish
Resident Realty - Fort Collins, CO

In the meantime our national deficit is far beyond the manageable point, with no end to spending in sight. Anyone who doesn't understand how far this administration has taken us over the cliff, is in for a rude awakening! Welcome to the world of socialism. It will work for us just as well as it has worked in Europe.

Jul 30, 2012 01:40 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

The economy is trying to get better but the government keeps interfering and keeps it from happening.

Jul 30, 2012 07:40 AM
Dale Terry
Yadkinville, NC

Here are some points that the left would have you believe.  There was not a "Great Recession", there was a recession and we have had growth for 3 years. That is from the Obama campaign.  So why all the unemployed? 

We will have high unemployment because the jobs are gone for good.  Housing could turn around and we still would have high unemployment.  The government must continue to shed jobs, they suck the life out of the private sector.

Education is not the key, not with our current system.  Yet I hear no calls for education reform.

Obama has been a terrible failure but the media has so much invested in him they will turn away from the truth.

Jul 30, 2012 09:29 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jon - And the sad part is: Our "leaders" are too spineless to offer the kinds of reforms necessary to actually make a difference.

Rob - Politicians are only interested in short term solutions--the kind that will get them re-elected.

Dale - Most of our politicians are not only inept, they're ignorant of what it will take to get the country back on track. 

Jul 30, 2012 09:50 AM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Most people don't look beyond any veneer to see what's really up.  And the Dear Leader counts on that!

Economics is a system.  A drought will affect more than simply food-price inflation!

Sep 03, 2012 09:31 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jay - I think we're suffering a drought in leadership.

Sep 03, 2012 11:14 PM