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Recovery or No Recovery? That is the Question.

Guest post by: James Dicks

Article Overview: James Dicks examines the discrepancies of what economists are telling us about a possible technical economic recovery and what the American public is actually experiencing.

Recovery or No Recovery? That is the Question.

We are inundated on a daily basis by the 24-hour news and business channels that the United States has experienced the worst of the economic downturn and is now coming out of the greatest recession since the Great Depression of the 1930s. But if you ask your neighbor, you're likely to discover that the typical American family just doesn't buy it; they aren't feeling any better today than they did yesterday.

In a recent poll of more than 1,000 Americans conducted by CNN/Opinion Research Corporation, 84% of those surveyed believe that the U.S. economy is still very much in recession which is s slight improvement from September's poll where 87% felt the recession was still alive and well. This kind of public sentiment, while heartfelt, seems to be just the opposite of what the nation's economists are telling us; that the "Great Recession" has finally come to an end.

Economists are in almost universal agreement that, according to the numbers, the worst of the economic slowdown appears to be behind us. According to the latest reading on gross domestic product, the U.S. economy grew at a 2.8% annual rate in the three months ending in September, the broadest measure of the nation's economic activity. And while job losses continue, the number of jobs lost in November fell to 11,000, the smallest amount of any month since the start of 2008, while the unemployment rate fell to 10% from 10.2%. Plus a recent survey of top economists from the National Association of Business Economists found 81% agreed that the recession was over.

So, why the discrepancies?

While there have been some economic improvements, economists believe that it will take a long time, perhaps even years to dig out of the economic upheaval that this recession caused. Because the improvements have been slight, the average American family just doesn't feel it yet. One economist put it this way, "The hole is a very big hole this time and the recovery is very modest so it might take us a number of years to get out of the hole." And this startling result also came to the surface recently. While economists are getting more optimistic, the consuming public appears to be getting even more pessimistic. The same poll found that only "15% believe the economy is starting to recover from the problems it faced in the past year or so, down from 17% who saw improvement in the previous poll in September." And the public also believes that things will get worse before it gets better.

This is something that the retail industry didn't want to hear during the biggest shopping period of the year. Holiday shopping so far has been less than stellar. A recent Christmas Retail Survey released during the first week of December by America's Research Group (ARG) and UBS showed that sales were weaker this year than in 2008. Of those consumers not shopping, an overwhelming number, 95.1%, said they will wait until just before Christmas (some even said they'd wait until December 24) to get more items on sale.

And further evidence of a shaky American consumer base, the most recent Consumer Credit report released by the Federal Reserve showed that Americans borrowed less for a record ninth straight month in October, another sign that consumer spending will remain weak and make it more difficult for the economy to produce a sustained rebound. And unless the U.S. consumer develops some confidence in the nation's economic foundation, the chances for recovery are probably negligible.

We are all hoping for a more profitable 2010, and the last thing I want to be is pessimistic (it just goes against my nature). But until our national housing and mortgage industry is repaired, until the banks start loaning money again, until jobs start picking up, until the confidence of the American consumer is bolstered by a feeling that our economy is, in fact, returning to normal, this country could continue to experience the same economic doldrums in the New Year. Let's hope the effects of the technical economic improvements economists are seeing today will soon show themselves fundamentally to those of us who live on Main Street USA.

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Article Tags: Business, Congress, Credit, Credit Cards, Crisis, Deficit, Economy, Financial Growth, Financial Responsibility, Goals, Government, Housing, Investing, James Dicks, Job, Leadership, Mortgage, Obama, Premieretrade, Refinancing, Saving Money, Stimulus, Success



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