Foreclosures Continue to Put Question Marks on Recovery
November 9th, 2009
Foreclosures are continuing and putting a question mark on recovery. Some experts feel that the recovery will only be temporary. A government report will give a clear picture about the condition of the economy following the worst crisis since the time of the Great Depression. During the last third quarter there were signs of a robust growth.
There are expectations that the commerce department will note that the GDP – it being the yardstick for measuring economic activity – increased for the first time since the second quarter of 2008. But the question is whether this trend will continue or if there will be stumbles.
Many say that the foreclosure triggered crisis that led to the starting of recession from December 2007 has become history. The third quarter surging of the economy was largely due to the government incentives but how far that will be sustainable is doubtful. The economy left on its own might become wobbly again. Patrick Newport of HIS GlobalInsight warned, “Don’t get carried away by the really strong number. The economy is still losing jobs and it’s still fundamentally weak in a lot of places.”
An analysis conducted by Bloomberg News noted that the growth in the economy was by 3.2% – a good pace but much below the pace that was prevalent before the crisis erupted. According to the predictions by TODAY/HIS Global Insight Economic Outlook there will be moderate growth through the early part of 2010.
The National Bureau of Economic Research has the technical authority to officially state that the recession is over. But the GDP readings of the commerce department will informally confirm the fact that recovery has started. Newport said half of the growth noted came from the impetus given by the government to the cash-for-clunkers scheme. But that has expired in August and now is the testing time to see how independent the growth of the economy has become.
Sam Bullard of Wells Fargo said, “Consumers are taking their income and putting it toward paying off … debt and increasing their savings.”
Newport explained that half of the increase was due to the liquidation of massive industry on the part of manufacturers and the retailers during the time of the recession. Once the firms restocked themselves during the next third and fourth quarters “you’re not going to continue” to pep up output with vigorous consumer demand. Another spark to the growth came from the housing sector but that was because of the tax credit offered – it too being for only a short time.
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- Increase in Foreclosures Prompting Class Action Legal Suits
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- Foreclosure Assistance Being Taken on Tour by Housing Advocate
- Washington Mutual, the Symbol of the Foreclosure Crisis, Continues to be in Trouble
- The Consequences of not Paying Mortgages Can be Grim
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