The AP reported that American consumers are snapping back to life, kindling springtime hopes that the recession is losing steam. See below.
Even though the U.S. economy shrank again in the first three months of the year — and by a lot — Americans stepped up their purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Hopes for revival depend on those consumers, who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings. If they keep buying, businesses will need to boost production, feeding yet more economic activity.
Against that backdrop, many analysts think the economy is sinking less now than it did from January through March. Most believe it could start growing again by summer or, more likely, by the final quarter of this year.
The Con
Now that the Baby Boomers are reaching retirement age, the world’s golf courses and cruise ships are going to be overbooked, right?
Not so fast.
A study by Cornell University found that about a third of all Baby Boomers are planning a second career in their Golden Years. With over 78 million Boomers in America, that’s 26 million 60+ year olds planning to re-enter the workplace. That’s a lot of workers.
The question to ask is: Why? Why, when they could be planning years of leisure and travel, are these Boomers sending out resumes and re-entering the workplace?
For some it is a matter of finances. According to the Congressional Budget Office, 25 percent of Baby Boomer households don’t have enough savings put away to retain their standard of living upon retirement. Even though the Boomers have, on average, earned more money than their parents, many have spent it all already. They can’t afford to retire and need income, so they’re heading back to work.
But starting a second career isn’t something limited to the oldest Boomers. Many are finding new careers in their 40s and 50s due to circumstances beyond their control, like losing their jobs. New York Times economics reporter Louis Uchitelle estimated that more than 30 million workers–mostly Baby Boomers–have been downsized out of a job since the 1980s. So instead of decades of leisure and relaxation, many Boomers are facing years of hourly wages in part-time jobs to make ends meet.
I think of Sam. He is the tall elderly man that takes my ticket at the local movie theater. I am starting to see more and more people in their late 60’s and 70’s working non-career jobs.
The Nightmare Trifecta
I think of all the retirees who have had half of their home equity swiped away to turn around and have their stock portfolio’s, 401k’s and pensions cut 40% by the stock market crash of 2008. They’re about to see their money cut in half again once the reckless printing of all the trillions brings the much feared inflation again. Inflation is a hidden tax put on honest hard working americans. It takes a hard earned dollar and selfishly turns it into 50 cents. Why? So our country can continue our ridiculous deficit. It’s damn robbery.
What’s going to happen when interest rates go up? Who is thinking about this? What will happen to home prices then? Are we headed for another mini housing boom followed by another crash? What about all the millions of vacant homes, what about all the excess inventory? What about all the REO’s not on the market yet? What about the millions of foreclosures that are happening in 2009? What about the millions of jobs being cut this year? How many of these homes are being purchased by speculators? What about falling rents? What about the huge wave of consumer credit cards going delinquent?
The recession is losing steam? Really?… Really?? I’m not convinced.
I predict a false bottom in 2009 and another wave of deeper problems hitting in 2010 – 2012. I guess we’ll have to wait and see. To be continued…
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{ 13 comments… read them below or add one }
HOME PRICES WILL FALL ANOTHER 30-50% IN THE NEXT TWO OR THREE YEARS ! OH WAIT !!!!!! JIM CRAMER SAYS HOUSING WILL BOTTOM ON JUNE 30TH . WHAT WAS I THINKING ! ……………………..OK WHO NOT TO BELIEVE ……NAR , REALTORS , MORTGAGE BROKERS , CNN , CNBC AND MORE . THEY WILL SPIN FOR ETERNITY ! DO NOT BUY NOW . WAIT AT LEAST TWO YEARS AND YOU WILL SAVE THOUSANDS . THERE IS ESTIMATED TO BE ANOTHER 5 MILLION HOMES FORCLOSED ON IN THE NEXT 3 YEARS GIVE OR TAKE . WHEN HOUSING BOTTOMS IT WILL STAY THERE FOR A FEW YEARS IF NOT MANY YEARS . U HAVE TIME TO WAIT . LONGER U WAIT THE CHEAPER HOUSING GETS . PEOPLE ! USE COMMON SENSE ! GO WITH YOUR GUT FEELING. BUY WHEN ITS AFFORDABLE FOR YOU NOT REAL ESTATE AGENTS ! DO NOT LISTEN TO THE SPINNING CRAP ON TV . JUST LOOK AROUND AND SEE WHATS GOING ON IN YOUR AREA . U WILL KNOW WHEN ITS TIME . MY OPINION ……. FOX NEWS IS MOST ACCURATE !
Chicken Little was wrong. Just look at the numbers a little closer. The economy is really only bad for people who were just a hairs breadth away from the wire in the first place. I still see homes moving, even in Orlando and Phoenix, and not just distressed homes, either. Homes that sold a year ago are now back on the market in these areas at 100K markups, and I doubt the listing agents would take them if they thought they wouldn’t sell, right? I see the sales, guys, and they are still shockingly high. It’s all right there on Zillow. It can’t all be sellers from a couple of years ago putting their bubble era equity back into the market.
And, as they say, maybe it is regional. In states like Nebraska and Texas, especially booming cities like Houston and Austin, there is NO sign of a slow down. NONE. You can see the upward curve. House sales are up, home prices are climbing, and while the mean salaries don’t seem to support the prices, the homes are moving!
Essentially, not much has changed in housing, and not much will change, especially if the alternative is paying a monthly rent that is as much as a mortgage payment, which is the case just about everywhere. FHA loans are probably the next big thing for future subprime buyers.
Well, if you believe that Fox news is most accurate, then I have news for you. BBC conducted a study and found Fox news watchers the most uninformed, and the least accurate in terms of news watchers.
I’m not sure why you think CNN would put a “spin” on the housing market – many news orgs missed it, just as many economists, and investors.
Try watching PBS, or listen to NPR – the news there was rated most accurate, and least biased.
Great article and right on target. It is funny how incredibly well this “con” is working. Just look at the responses, delusional and defensive.
People better wake up and fast, forget the Dems. and the Reps. lets push for term limits and get a third party that actually works for the people.
Francis, if you are using a BBC study to preach truth you may want to consider the source. If you can’t see to bias in the media you aren’t looking very hard. Just because FOX says things that YOU disagree with does not make it wrong.
yes NPR is a good source for info .just take a look at many different polls and you will fine that cnn and cnbc are falling way behind ! i have watched and compared all of them myself and have concluded that fox is most acurate . yes they make mistakes to. im not saying they are perfect . i am an invester and developer . i follow the markets daily ! ive have seen cnbc take numbers and spin them in a way that deceives the public on many occasions . its true ! steve liesman recently spun some numbers in a way to make the people think employment is much better and housing numbers much better . in turn said that the bottom is here and people need to start investing now . housing will start going up now so buy before thay are priced out .lol you got to be kidding me . lies !!!! market do not recover in a v shape . housing will not return to prices seen in 07 for years ! jim cramer recently said housing will bottom on june 30th . get real !!! no way in hell ! i can go on and on . i dont have time now . they deceive the people . fox for the most part , try to be balanced with the news and opinion. you will find both right and left on fox ! cnn,cnbc 90% left and that is fact ! recently they tried to say that fox promoted the tea parties . funny . all lies . i followed that from the start . not true . maybe you should try watching both fox and cnbc on a regular basis and learn for youself who is and is not giving acurate info ! seriouse ! follow the number game when it comes to the stats on different topics . you will see !
oh yeah . and what makes you think that the british broadcasting coporation is all that accurate ?
http://www.newsmax.com/insidecover/oreilly_ratings_cnn_msnbc/2009/04/29/208733.html maybe u would enjoy reading this !
Come one guys! Nobody has a crystal ball to find out where the bottom is for Home prices.
The best time to buy is when mortgage is cheaper than renting! I see a lot of that in California.
The big drop has happened already. Yes it may go down another 10 or 15%, but who cares. By the time you wait for a real bottom (good luck!) in 2 years you will have thrown $48k in the toilet in you paying $2k rent.
not true . depends on how long you plan on staying in a house . first few years is all intrest anyways ! and ! figure it out ! save 20 or more % on the house you buy = savings on your payment for the next 30 years if you plan on living in house that long ! trust me , with the economy crashing , unemployment rising , lending standards tight , more forclosures to hit the market , estimated 5 million in the next few years , oh yes lets not forget the comercial side of this crash that is ready to hit , and all time high credit card dept , prices WILL FALL ! at least 20% to 50% depending on where you live . recessions dont recover overnight in a v shape . when the bottom hits you will have time !!!!! housing will not shoot back up overnight .it will take years for the prices to get to same highs as in 2007 . ive been through a few . this is the worst since the depression . i am amazed at all the denial i see in regards to this housing market . so many do not want to accept that their home has and will continue drop in price ! well, wake up and smell the coffee ! its here and here to stay for quite some time ! lol unless youre a REALTOR or the NAR ! IN THAT CASE , THE BOTTOM HAS HIT A DOZEN DIFFERENT TIMES IN THE LAST 2 YEARS AND ITS THE PERFECT TIME TO BUY A HOUSE ! HURRY BEFORE ITS TOO LATE AND YOU ARE PRICED OUT AGAIN ! GIVE ME A BREAK !!!!! THINK FOR YOURSELVES PEOPLE !!! LOGIC AND GUT FEELING = SUCCESS!
I was bear in the Housing market since 2000, but I am buying some rental properties after so many years! However, yes I do have positive ca$h flow with my investement. I will be buying 1 property per year as long as I get positive ca$h flow. Houses never go to Zero, but stocks can and interest rate is almost zero. No Brainer!!!!
cash flow is usually good . and there are some deals out there now if you search hard enough for them . but housing never goe’s to zero ? in most cases yes . in 1990s recession i was buying homes for $15-$30,000. in the inland empire ! i purchased a beater for $12000. in san bernardino . they couldnt give them away then .those same homes were selling for around $300,000. in 2007. i m seeing it repeat itself now and will probably be much worse this time around ! so houses may never go to zero ! but dam close !!!!
I really liked this post. Can I copy it to my site? Thank you in advance.
Thank you. Yes you may.
Jon