The big news in town is that the American economy is growing. As Obama reported on Monday “Our economy is growing again for the first time in more than a year”. This is good news for a president that has been hard hit by the economy and whose dream public approval ratings have dropped with the economy. However Obama added: “ We cannot sit back and be satisfied given the extraordinarily high unemployment levels that we have seen”.
The U.S unemployment levels are currently at a 26 year high of 10.2 percent. This percentage reflects a 10.2 percent of people that can and want to work that are currently unemployed. For other industrialized countries like France, Germany, Spain or Norway that level is not good but is far from terrible. For countries like France 10.2 is actually close to business as usual. Of course these countries have a completely different economy that allows for or even creates high unemployment levels. The U.S however is not ready or willing to withstand such levels and needs to change for any lasting improvement to occur with mortgages or the economy as a whole.
The current growth in the economy is according to Obama (and his many economy advisors) a result of cost-cutting across the board that has generated a surge in U.S productivity. Unfortunately this increase has not led to hiring, business seemed to be happy to sit on the rise of productivity for now.
The question is if this surge will continue and help the U.S mortgage crisis. Over 1 in 7 homeowners is foreclosing on his home or over 30 days behind on payments. This number will only increase if unemployment does not start to drop.
The latest demographic to join the fascinating statistics of foreclosures is not the typical subprime borrower with bad credit and worse loans. The demographic that is pushing the foreclosures rates is people with great credit scores and prime mortgages that have lost their unemployment. Tackling this issue will be difference between truly jumpstarting the economy or the dying candle that shines the brightest before fading out.
The mortgage crisis, the larger credit crisis and the economy in recession as a whole have crippled the government’s tax revenue. This makes traditional tax rich popular solutions harder and harder to justify and it may no longer be available for the government in their efforts of re-starting the economy.
Cheaper methods are now being looked at. Tax breaks and other incentives are being considered for companies that increase their payrolls. These might prove effective, however if you are in a position to take advantage of the tax incentives now on offer this might be the time to take advantage while they are still available.
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