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MarketWatch: Economy still hobbled by weak housing, high debts

WASHINGTON (MarketWatch) – The weak housing market and high levels of household debt are still holding back the economic recovery, more than four years after the start of the recession and nearly seven years after the housing bubble began to deflate.

Make no mistake, the economy is growing. Over the past 10 quarters, the economy has grown at a 2.4% annual pace, exactly the pace it grew in the 10 quarters before the recession hit.

That kind of growth isn’t too shabby… in normal times. But when you have 13 million unemployed Americans (plus millions more who would like a job), it’s unacceptably slow.

Typically, construction of new homes and home sales helps pull the economy out of a recession. For instance, after the 1970, 1975 and 1982 recessions, residential investments added about 1 percentage point a year to growth during the first years of recovery. But because the housing market is still depressed, it can’t fulfill its typical role this time around. Residential investments have subtracted from growth in each of the past six years.

The other major source of growth early in recoveries has traditionally been the expansion of consumer debt to buy durables such as autos……Learn More

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Posted by on Feb 29 2012. Filed under Current News, Economy, Post To Slider. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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