Even as the nation's economy begins clawing its way out of the worst recession in 60 years, there are growing signs that this recovery could come with an unsettling twist: The wheels of commerce may begin to turn again without any substantial boost in jobs.
Not only is the national unemployment rate, now 9.4%, likely to climb into double digits later this year, but it is also expected to remain there well into 2010, economists say. That would prolong the misery of the unemployed, squeeze retailers and other businesses, and add millions of dollars in government costs and lost productivity. It could even threaten the recovery itself.
5 comments:
I think mass layoffs are continuing at a record pace; in May they cost nearly 313,000 workers their jobs. Since the recession began in December 2007, the U.S. economy has shed 6 million payroll jobs. That tally is expected to grow by the day.
This is contributing largely to the housing crisis.
I think surging unemployment is putting the buyers on the sidelines, and lenders remain reluctant to loosen their purse strings, and are forcing borrowers to meet stricter credit-quality standards because of the fear that these people might become unemployed tomorrow.
Consumer loan delinquencies edged up to another record high in the first quarter, according to data released Tuesday by the American Bankers Association.
I think a continued rise in unemployment has been the main culprit for the continued rise in delinquencies
"The number one driver of delinquencies is job loss," James Chessen, the ABA's chief economist, said in a statement.
"When people lose their jobs, they can't pay their bills. Delinquencies won't improve until companies start hiring again and we see a significant economic turnaround."
The composite delinquency rate among eight types of closed-end installment loans rose to 3.23 percent in the January-March period, according to the ABA's consumer credit delinquency bulletin.
Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration's home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments.
Read more http://www.reuters.com/article/topNews/idUSN2632992220090626?ref=patrick.net
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