Economic Recovery
SEARCH BLOG: ECONOMY
There are indications that the U.S. economy may have bottomed out. Manufacturing is showing some signs of life again, but still on a long-term downward trend. The stock market has cracked the 9,000 mark on the DJIA, but well below the 14,000 mark of the previous high. Home sales, while anemic, are beginning to occur at the lower-priced end, but much of that may be bottom-feeding for bargains.
Still, it is too early to declare that all is well. The unemployment rate is high and may rise for awhile. The dollar has been declining against all currencies and continues to do so... although some would argue that is a good sign for future exports.
The Obama administration and the Democratic Party controlled Congress have been causing significant political churning and keeping business wary about future commitments that could bring a real return to "normal" economic activity. The "cash for clunkers" deal was both successful and not; it sparked sales at automobile dealerships and then ran out of cash while causing massive administrative problems for those dealerships... including having to sell cars well below the price the dealerships paid for them without actually receiving the money to cover the costs of the vehicles. This small program has been touted by conservative opponents as typical of the ineffectiveness of the Obama government in running anything.
Last week Treasury Secretary Timothy Geithner impolitely summarized his frustration with the U.S. financial regulators for their failure to march lockstep with the Obama plans to overhaul financial regulation. There are more hints coming out of Washington that taxes will be raised for income levels far below the original line President Obama had announced. Much depends on his socialization of health care and the CO2-based climate bill that may have treasury draining effects.
Oddly, one of the effects of this recession is that people are saving more and that may be extending the time of the recession. High unemployment, lost home values, and lost investment values have left most people simply fearful about their economic security. The last thing individuals do under those circumstances is make the kind of purchases that will fuel an economic recovery.
Any economic recovery faces a "chicken or the egg" issue this time.
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