ECONOMIC RECOVERY - IN HOUSING MARKET AND IN GENERAL - May Prove Elusive in 2009!
ADJUSTING FOR INFLATION, AVERAGE WAGES FOR MEN IN THEIR 30'S NOW LESS THAN THEY WERE IN 1970'S - UNIVERSITY OF CHICAGO POLITICAL ECONOMIST!
For many, the year 2008 has been a cold slap in the face as compared to so many prior years of unending economic growth, as well as near automatic appreciation in the real estate market. University of Chicago Political Economist Marvin Zonis, a Professor at the University's Booth School of Business, predicts "the only thing going up besides unemployment will be the sale of anti-anxiety and anti-depressant medication."
He predicts a period of high financial stress next year - with job insecurity and dwindling personal assets at the heart of the problem.
Says Robert Chirinko, a Finance Professor at the U of C, "We've been lulled into thinking major recessions don't happen. If anyone is still thinking this is a mild recession, they're going to be sadly mistaken."
One operator of a family-owned roofing business in the Chicago Suburb of Naperville IL sees the risks as the Chicago Area Real Estate Market is likely to continue sluggish next year. However, President Dale Showalter, of Showalter Roofing, is expanding instead of laying off. He is adding a new sheet-metal shop and crew, in hopes of riding out the economic recession and housing slump, and better positioning his company for when the market does turn around down the line.
Every day, however, Showalter and others who make a living off housing, as well as homeowners themselves, hear the drumbeat of bad news. Average Housing Prices have fallen nationally for the first time since the Great Depression in the 1930's. Median Chicago Home and Condo Prices are off just over 10% since this time in 2007. And some experts feel the Housing Market has not yet hit bottom.
Erik Hurst, another University of Chicago Business Professor, predicts another 15 to 20 percent fall off within the next two to three years.
Should home prices continue to fall, it will continue to discourage consumer spending, and reduce the incentive for builders to build new homes. Lenders will suffer, and will lend less on mortgage loans - or tighten loan requirements even further. This could create a further drag on the U.S. Economy, he continues.
Predicted job losses in 2009 will be high, according to Paul Kasriel, Chief Economist of the Northern Trust Bank in Chicago. Through the end of 2008, he expects a loss of 2.26 Million jobs versus last year. He expects an average monthly job loss of 250,000 positions through 2009, especially mid-year.
Most experts agree new financial initiatives by the incoming Obama Administration could improve the U.S. Economic Picture. Even if they help, however, such actions will take some time before we feel their impact.
For more, read Greg Burns article in today's Chicago Tribune.
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