The recession is over? Really? Well, according to Wall Street and the last few record breaking days, the recession is 'technically' over. But, can you tell? Probably not so much.
According to Newsweek, home sales have been on the rise for the past three months, which I entirely believe. We were outbid on three houses during our recent search, during this recession. Before we actually found one that didn't put us in a heated bidding war, we thought that we would never get one. Housing prices may be down, but first time home buyers are eating up the market in the $100,000 to $300,000 range, and let me tell you, the competition is tough and growing out there for that perfect first time home. The extra $8,000 is a great incentive, and I'm definitely looking forward to getting my check come tax season!
Though the recession is over based on a technicality, the pain and heartache is going to endure for much longer. Right now, the unemployment rate stands at 9.5%, but by the end of this year experts are predicting it to rise about 10%. How can this be if the recession has ended?
Technically, whether we are in a recession or not is dependent upon many things. The stock market has been on the rise since March, and the economy is technically more active than it has been in over a year. In June, seven of the 10 indicators in the Conference Board Leading Economic Index pointed upward, according to Newsweek. These are the factors that are considered when determining recession.
Consumers will continue to struggle through this year, and perhaps some of next year, until they notice things are turning around and their able to find work. While the stock market may be turning around, and the recession may be over, jobs and the demand for supplies are going to be slow to follow.
Consumers are spending less, whether because they are strapped for cash, or because they are afraid they might be soon. The "save you money under your mattress" syndrome is still in effect, and many are taking it to heart by not pumping their money into the market. Until jobs start to pick up, and until consumer confidence rises again, things are going to be tough.
Consumer confidence is at the same place it was back in March, even though the recession is over and home sales are up, consumers are still afraid to spend, according to Forbes. While the stimulus plan is beginning to actively take effect and infrastructure and green jobs are beginning to come back, consumers are not seeing the results. Banks are still withholding loans and still refusing to let go of the reins a bit.
According to Slate, it will literally take the "next big thing" to pull us completely out of these tough economic times. Prolonged periods of high growth have always been spurred by a game-changing megatrend that ultimately touched every segment of the economy: the steam engine, electricity, railroads, the availability of credit, the microchip, and most recently, the Internet, globalization, and cheap money. Finally, when you're dealing with an economy the size of the United States, you need a pretty powerful lever to create meaningful growth. Having a boom in a few sectors likely won't be enough, said Slate.com.
Thus, having a growth in green technology or infrastructure might not be the end all solution. When the stimulus money began going out, sectors like education couldn't use the money to create jobs, it had to use the stimulus money to save jobs and avoid cutbacks. Installing green technologies such as solar panels and wind farms will create jobs for the installers, but, while all of that is going to help us out in the long-long-long-run, it's a short term fix because after installation it doesn't take an army of workers to keep that stuff running.
Perhaps health care is our next big adventure. Or, perhaps you have the "next big thing" to turn it all around.