Ben Bernanke, the Federal Reserve Chairman, made the latest Beige Book results sound great: The recovery is spreading across all sectors of the U.S., and Americans are spending fractionally more.
On the other hand, 8.5 million people remain unemployed and overall unemployment is really more like 18 percent, if you count everyone who is underemployed and those who have given up on ever being able to find a job.
Employers are reticent to start hiring, and most don’t expect to get back to full capacity until 2012, or later.
In the housing world, the expiration of the tax credits has led to a plunge in home buying demand. How bad is it? According to the Mortgage Bankers Association, applications for a purchase mortgage have fallen to levels last seen some 13 years ago, or nearly 40 percent below the levels seen in mid-April.
Is the recession over? And if it is, is anyone except those who live on Wall Street going to feel it?
The latest foreclosure numbers from RealtyTrac are a good indication of what’s going wrong with the current post-recessionary period.
In its May, 2010 report, foreclosure filings (including default notices, scheduled auctions and bank repossessions) were reported on 322,920 properties, a 3 percent decrease from the previous month and an increase of less than 1 percent from May, 2009. According to the report, one in every 400 U.S. housing units received a foreclosure filing.
“The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. “Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed.”
The problem with the number of foreclosure filings falling slightly is that we’re still looking at a huge number. And, in areas of the country where unemployment is extremely high, the number of foreclosure fillings is even higher.
In Nevada, one in every 79 housing units received a foreclosure filing. In Arizona, it was one in every 169 housing units. In Florida, it’s one in every 174 housing units. In Michigan, the foreclosure rate surged 6 percent in May, and is up 46 percent from a year ago. California, Georgia, Idaho, Illinois, Utah and Maryland round out the top 10 states with the highest foreclosure rate.
The news from this month’s National Association of Real Estate Editors’ conference confirmed that while the rate of foreclosure filings might fall a bit, the overall rate of foreclosures is projected to stay extremely high for the next few years.
It doesn’t feel like the recession is over if you’re unemployed or have lost half of your household income, are in foreclosure or are seriously delinquent on your mortgage, and you’ve nearly maxed out your unemployment benefits.
I’ve been hearing from more folks who are just about at the end of all their resources. They’ve stopped paying their mortgages, cut out everything except food, gas and electricity, and are developing a Plan B, which includes figuring out where to go when the foreclosure notice is finally tacked to the front door.
If this is the face of the recovery, it seems to me that millions of Americans haven’t been invited to the party and their prospects for being invited in the foreseeable future are somewhat dim.
You raise some valid points in your article. but the most important thing to remember is, we are not in a recession. We are in an economic crisis, some call it a collapse, some call it a “credit crisis”, some call it a slow motion train wreck.
A true recession, is a business cycle, what we are going through is a social collapse of expectations, trust and an aging demographic in most western nations.
The number of people on food stamps is one in six, the number of children living in poverty is more than one in five. This is in the supposedly “richest nation on earth”.
We are in a moral as well as a financial crisis, technology has allowed us to disconnect from our neighbors and communities. We think we are independent but we are all interconnected in a chain of actions and reactions.
This economic meltdown will take a decade to burn itself out. Just run the numbers for how long it will take to close the banks on the FDIC watch list which is currently more than 700. Run the numbers on how long it will take to clear the books of banks’ foreclosed and repossessed homes. Run the numbers on how long it will take to achieve full employment at the current hiring rates.
Our economic future will be flat if we are lucky, but more likely declining for at least a decade. Think it can’t happen? Look at Japan, twenty years of economic decline and counting. The only thing in our favor right now is we print the reserve currency of the world. What happens when that changes?
Now is not a good time to invest, it is a good time to preserve what you have attained. Prepare for the worst and hope for the best.
Wow lady a little pesimistic huh….. its people like you that don’t spend and sell that keep us in this “crisis”. When people are spending, buying, and selling is when the economy is good…. and how can anyone do that if everyone is hoarding their money……
I noticed you didn’t dispute any of my data points or trends. You criticize my writing by claiming it is “pessimistic” – All I’m offering is the truth as expressed by the data I have available.
If you have magic data that has appeared out of the ether that contradicts these facts, I’d love to see it. I am not a pessimist or an optimist, I am a realist. I try to live in the reality that exists rather than a fantasy created by the media.
Run the numbers using my data points as mentioned above, and then tell me where I was wrong.
Why do people label realistic, level-headed, honest and direct people as being “pessimistic.” Most people can’t handle the truth, but burying your head in the sand won’t get us out of this mess either. Someone has to tell it like it is.