Economics
Recovery Is Worst I’ve Ever Seen
Harvard economist Martin Feldstein says the economic expansion that began when the recession officially ended in 2009 is as bad as he’s ever seen.
Many economists have said the economy is stuck in an extended downturn as opposed to recovering from a recession. Traditionally, recessions are followed by marked recoveries, but that hasn’t been the case today.
“I’m not quite sure what a depression is,” Feldstein tells the Wall Street Journal.
Either the economy is turning down, in which case you’re receding, you’re in a recession, or the economy has reached bottom and is starting up, and then you’re in an expansion,” said Feldstein, a former White House chief economist under Ronald Reagan.
Posted in Economics
Signs of a Real Estate Recovery?
The number of home owners who were put on notice for defaulting on their mortgage payments dropped last month to the lowest level since 2006, RealtyTrac reports.
Meanwhile, foreclosure filings for the eighth straight month also were down as filings fell 33 percent in May compared to a year earlier and 2 percent month-over-month. Also, lenders took back fewer homes in May, the second straight month of declines. And bank repossessions were down in May too — down nearly 30 percent over the last 12 months.
Is this a sign of a recovery in real estate, which has been bogged down by a high number of foreclosures over the last several years?
Experts are still cautious. Lingering delays in banks’ foreclosure process may be the culprit for the declining numbers, they say, and not an overall improving picture of the number of home owners facing foreclosure.
No Good News on the Economy
First, real estate. The price of homes started sliding again, even as the number of homes moving remains near historic lows. Fewer people are buying, and those who are buying need smaller loans for cheaper homes.
Unemployment and — just as significantly — underemployment have consumers sitting on their hands. No one unsure of their future income stream is making large purchases, or starting large ventures. And, even as the official jobless rate creeps downward, many economists believe the under- and unemployed number is over 20% of the workforce.
None of those people will be committing to a large loan.
Meanwhile, interest rates are about as low as they can get. Mortgage rates, for instance, are well under 5%. That means that the loans that are going out are earning less for banks — and aren’t replacing the revenue lost as older loans come off the books.
