Where is the US economy headed?
No doubt, recovery expectations have risen over the past few months, mostly on the back of stimulus packages and proactive stance of the government. But this doesn’t seem to be a long term fix to the situation as debt is rising and soon it will build up as a mountain of worries. Everyone is aware of the situation but all efforts are being made to keep the economy running in the shorter term.
Is the Debt Problem Really Intense in US?
It’s really hard to say if the economy will collapse in 2011, but it’s almost certain that if the government continues to spend on temporary relief packages to stimulate the economy, the mountain of increasing debt will lead to the biggest financial disaster ever witnessed by mankind. At present US government, businesses nationwide and American consumers are all sailing on the same boat, which is headed for an iceberg. If you do not agree to what is being said here, then read on to know hard facts.
Will the Housing Market Recover in 2011?
Mortgage defaults are still appearing fresh in the market, keeping the housing prices near record lows. Defaults have been record high and still increasing since mid 2007. What if housing prices fail to show considerable recovery going into 2011? Well, many economists are of the view that housing market may not show any sign of improvement till the end of next year. Now, this could result in a second wave of foreclosures, which will make the cracks much wider and hopes of recovery will be shattered for long. Is Consumer Spend and Employment Situation still a Threat? Ideally, a recession is a temporary blip in economic activity, but this time around it has stayed much longer. This is evident from the employment situation, as the unemployment data is not improving despite so much quantitative and qualitative easing by the monetary authorities. Latest stimulus package has provided a support to the financial markets as investors believe that this money will help in creating jobs in the system, and as an end result consumer spend will once again pick up. But, so far things have not worked as they were expected by the Fed, and same could be the case yet again.
Are the Americans Broke?
There is no hiding from the fact that more and more American citizens are filing for personal bankruptcy. In such scenarios, how can authorities expect the demand to surface again, when people are high on debt?
America simply needs jobs, and it needs them at a much higher pace than anticipated. The recent recession, which is now officially over, may have been an indicator of an upcoming depression in the system, as it was much more than what a recession is. Now, if we again slip back to negative growth, which cannot be ruled out so early, then the economic chaos will spread its wings globally, and the world will spend a decade with a flat growth.
Investors and traders should remain prepared such financial turmoil anytime soon. Even saving up on brokerage costs, by opting for cheap online discount brokers, can help in maximizing returns in such uncertain times.
Source by Varun Walia