While the employment picture continues to gradually improve, the economy is not recovering at the pace some experts had hoped for, and some are pointing fingers at the housing market for the slow recovery.
Federal Reserve Chairman Ben Bernanke says the economy is recovering at a “moderate pace” and that a high number of foreclosures and home owners who are “underwater” on their mortgages continues to drag down housing prices and the economy.
"Declines in the values of homes and stocks sharply reduced the wealth of many Americans during the crisis,” Bernanke says. “Three-fifths or more of families across all income groups reported a decline in wealth between 2007 and 2009, and the typical household lost nearly one-fifth of its wealth, regardless of income group.
"Moreover, one in eight of the households ... started the crisis with zero or negative net worth and thus had scant resources to fall back on to maintain their standard of living during bouts of unemployment."
However, there are signs the outlook is starting to improve. The construction industry in April increased employment by 9,000, which is its first monthly increase in years and may be a sign that the sector is finally in recovery mode. Overall, unemployment continues to decline, which will help more households start to feel more financially secure. However, long-term unemployment remains historically high, particularly among the young, minorities, and those with less education.
Source: “Real Estate Outlook: Bernanke on Housing,” Realty Times (May 9, 2011)
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