Many economists think that The Great Recession started in 2007 and ended in 2009, even if folks worldwide are still grappling with the fallout two whole years later. Believe it or not, the retail sector has reported the best earnings in all of three years for the holiday shopping season just past, yet houses continue to lose value. Economists find these two indicators, home prices and retail receipts, to be really useful indicators of the true state of the economy, so taken together these facts point to continuing uncertainty.
Despite the record profits, there is a hiring freeze throughout Corporate America. Credit is tight despite extremely low interest rates. Of course, who gives out hundreds of dollars right now – or, even, take it on – with all the uncertainty? But it’s a vicious cycle, since nobody wants to take those crucial first steps that somebody will have to eventually – a great many somebodys, actually.
Only twenty-one thousand homes were sold nationwide this past November, a record low for just one month. But if you’re a buyer, then the market is all yours, thanks to all the foreclosures, short sales, and auctions that have forced some steep discounts throughout the industry, including in places like New York, New Jersey, and Connecticut.
It’s a singular situation that even professionals such as real estate developer Isaac Toussie are disturbed by, where price declines seem to discourage sales!
The situation is much, much worse in cities such as Cleveland, Minneapolis, and even Dallas, darlings of the 1990s.
Whatever the case wherever it may be, an improvement will depend on one thing: jobs. But without real estate improving first, setting off a chain reaction of new purchases for major items, where will the jobs come from?
It’s a vicious chicken-or-egg cycle.
That’s why many observers believe the government must step in much more vigorously, with much more money, spent with much more care.
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