As temperatures heat up all across the country this season, so too are concerns about inflation, with rock bottom housing prices, and a weak labor market, adding fuel to the summertime fire. The result? Tanking consumer confidence in May, at least according to a private sector report released this week, and fears of something more economically-sinister a’ brewin.’
Based on a Reuters reading of the new economic data, “The Conference Board, an industry group, said its index of consumer attitudes fell to 60.8 from a revised 66.0 in April. The reading was below economists' forecasts for 66.5. April was originally reported as 65.4. The expectations index tumbled to 75.2 from 83.2, while the present situation index edged down to 39.3 from 40.2. Consumers' labor market assessment was less favorable. The proportion of those who said jobs were hard to get rose to 43.9 percent from 42.4 percent the month before, although the "jobs plentiful" category also rose to 5.6 percent from 5.1 percent.”
Despite some confusion about the economic outlook for the American labor market—in which jobs were added, but not at a rate high enough to keep up with demand—most polled viewed the job forecast as more dismal than not over the next six months. “Those expecting more jobs in the coming months decreased to 15.9 percent from 17.8 percent, and those expecting fewer jobs rose to 20.8 percent from 18.7 percent. Consumers' expectations for inflation in the coming 12 months rose to 6.6 from 6.3 percent.”
And folks have reason to worry. Following a few months of positive growth in what had been an extended period of recession-era unemployment numbers, business hiring slowed in the latter part of 2010, causing national unemployment figures to rise to a staggering 9.8%. Today, the national average lingers around 9%. Add to this dismal employment bump, another snag affecting the ability of the economy to recover: the recent drop in housing prices. This hit to the housing market further exacerbates consumer confidence, a necessary commodity to any long-term economic growth and recovery. And what would normally be a “buyer’s market” has devolved into a true confidence shift in the way many view the former American dream of buying a home.
This cycle of falling consumer confidence is leading many to assume the worst—or what Robert Reich called, “the economic truth that nobody will admit”—a double-dip recession. As Reich wrote, “But isn't the economy growing again -- by an estimated 2.5 to 2.9 percent this year? Yes, but that's even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we'd expect growth of 4 to 6 percent. Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent. Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. Housing is dropping because of the ever-larger number of homes people have walked away from because they can't pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer.”
A 2011 double-dip could therefore mean you’re forced to look at other options when considering how to get by, whether to save your home, sell your home, or simply keep a roof over your head, whatever the cost. If you’re feeling the pinch, things are likely to be bad for a while. As a result, now may be the best time to reconsider your options to diminish debt and start saving for a “rainy decade.”
If you too have been affected by the economic crisis, knowing a qualified bankruptcy attorney can help, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond “the dip.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation. Just call toll free to 1-888-234-4181, or make an appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.