The Continuing Foreclosure Climate Will Lead to More Joblessness

March 4th, 2009 | Tags: Foreclosure Notice

The continuing foreclosure climate of the economy will lead to more joblessness this year. It is better to be forewarned about the worsening of the recession. America is poised to lose a sizeable chunk of financial activity during the current year. More retrenchments are taking place in USA as well as abroad. The unemployment rate is at present 7.6% - this being the highest since the last 16 years. It is feared that it will increase to 9% in 2009.

This depressing forecast came from a current survey carried out by National Association for Business Economics. It is due to be formally released on Monday. The estimates tally with the predictions made by the Federal Reserve.

Chris Varvares the president of NABE and of Macroeconomic Advisers said, “The steady drumbeat of weak economic and financial market data have made business economists decidedly more pessimistic on the economic outlook for the next several quarters.”

Varvares and his team apprehends that the economy will shrink by 1.9% in the current year – this being a much more deep shrinkage that the 0.2% that had been forecast last fall. If the new predictions are true it would the first instance of the economy really shrinking for more than a full year since 1991. It will be the worst performance since 1982 – the time when the country had passed through an acute recession.

American consumers have been forced to cut back on spending because of loss of jobs, increasing foreclosures and falling house values. This has to led to business houses resorting to more retrenchments and slashing costs. All told – a vicious cycle of downward slide of the economy has set in.

The recession now being experienced started in 2007 and this is the most important challenge before the leaders in Washington including Obama and chairperson of the Federal Reserve Ben Bernanke. The root of the problem is the collapse of the real estate market, the credit freeze and the subsequent financial mayhem. The nation has not seen the likes of it since the 30’s. The situation is grim and there is no one remedial silver bullet to fix it.

Ken Mayland of ClearView Economics said, “As the news on the economy has darkened, so too, have the forecasts. We are suffering a period of maximum stress on the economy.”

Despite the various remedial measures being initiated by the Obama administration the prediction is that the economy will continue to be weak this year.