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Americans in a funk as housing, jobs stall
Disillusionment rife since recession
Question of the Day
The economy is entering the third year of an expansion that has been marked by robust business profits and a historic revival of Detroit’s automaker industry, among other boons, but most Americans don’t feel satisfied, opinion polls show.
What is generating the national economic funk, analysts say, is the lagging recovery in sectors that matter most to ordinary working people: jobs and housing. Moreover, an old nemesis for Americans — high gasoline prices — has made an unwelcome return even as consumers struggle without the growing incomes needed to deal with such higher prices.
America’s “hurry up and get there” mentality also is contributing to the widespread sense of dissatisfaction with the economy. A 2 percent annual growth rate that would be welcomed as healthy in crisis-plagued Japan or Europe is widely bemoaned in the U.S. as inadequate because it is not fast enough to produce hundreds of thousands of jobs each month.
Moreover, many people do not have the patience to await a gradual recovery in sectors such as housing that were hit hardest by the recession — even though economists say they must. The damage to the housing and construction industries has been so deep that it will take years — and possibly decades — for them to return to normal, analysts say.
“Something is amiss,” said Bill Barnes, an economics commentator at the National League of Cities, reflecting on the disgruntled national mood. “Officially, [the recession was over] more than two years ago. But a very high unemployment rate persists, and … that is a key measure of what normal folks mean by recession.”
With the national unemployment rate lingering at 9.1 percent, the economists’ view of the economy doesn’t seem to fit for most people, he said. “Recovery seems to be mainly about growth in [gross domestic product]” for them, he said. “Maybe growth is not the answer to all questions.”
The big housing burst
John Silvia, chief economist at Wells Fargo Securities, said Americans are grappling with some hard realities that are not making them happy but will dominate the economic landscape for years to come.
Foremost among them is the collapse of the housing market, which took with it millions of good-paying jobs in construction, home sales and mortgage finance that may never come back.
The housing boom of the last decade enriched millions of workers in the real estate industry and made Americans feel wealthy as the values of their homes seemed to double quickly and they were able to tap into those assets through increasingly exotic mortgage financing instruments that seemed to pose little cost.
“That era is over,” Mr. Silvia said.
The more than 30 percent plunge in home prices since 2006 — larger than the collapse in housing prices seen during the Great Depression and still continuing — has wiped out most of the gains in home value that made people feel good and left many “underwater” and with huge debts they can no longer afford and are struggling to pay.
The housing boom turned out to be a boondoggle fed by “misguided public policy” among politicians of both parties who strived to increase homeownership, Mr. Silvia said, combined with “excessively easy credit terms” that eventually bankrupted the banking system and many homeowners.
Given the ensuing devastation, the days of high-flying home prices and easy money probably will never return, he said.
Add to the nation’s monumental housing woes the increased difficulty of finding good jobs for millions of workers who don’t have appropriate training and education.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
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