A great deal is being made of some positive numbers in recent economic reports for housing and consumer confidence. Yesterday Federal Reserve Chairman Ben Bernancke made well publicized comments about the market recovery, led by a housing recovery.
His focus remains on stabilizing the financial market, "our forecast assumes continuing gradual repair of 
the financial system."
In his comments he points to continuing problems with employment. It seems to me that employment will drive any economic recovery.
Housing figures may very well be up as a result of a combination of low rates, low prices, and high tax incentives. Can these supports sustain an economic recovery?
We have a foreclosure problem that continues to grow, which by anecdotal and statistical evidence is receiving little help with bank modification efforts. Further a recent report indicates that 20% of homeowners are upside down in their homes. We have a pending credit card crisis.
There is plenty impacting economic recovery, and each good number is cause for new hope, but it just seems to me that employment will dictate the timing and speed of recovery.
Today an advanced report on non farm payrolls provided some hope with employment, indicating that the pace of job layoffs may be slacking. Friday, the actual employment figures will be published. If they are also good, then it may be that economic recovery is starting.
Another factor in the state of employment that impacts the real recovery is the increasing number of temporary workers and others not in the official employment figures. I have seen estimates that unofficial unemployment is well in the double digits.
Depending on what is considered, these unofficial unemployed and underemployed are estimated between 15% and 30%.
It just seems that employment is the determining factor for a turn around. Maybe we will find that employment has already turned and it is actually driving the gains in housing and consumer confidence.
That would give those positive signs real substance.
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Hi Richard, This is an excellent summary of where we are. If we look back through the last number of years, unemployment was very low but people said they were excluded form the gains in our economy and they were unhappy. We hear the words that all is going to be fine now and all that I can see that changed was everything and for the worse. But with these encouraging words spoken bu the new order, maybe those people that complained the loudest are happy now that the inequities are more equal now, :-).