While tentative headlines keep promising that the recession is just about ready to be over, the numbers have come out about another batch of job cuts; it seems that employers around the country aren’t buying the line about a recovering economy just yet. How this recent loss of jobs will affect the looming swell of foreclosures on the horizon is really only a matter of degrees in an already increasing bloat.
The business world’s lack of confidence in the economy has resulted in employers dumping 85 thousand jobs in December, a month that often sees high employment due to the busy holiday season. While it is true that the unemployment rate stayed the same over this time, there are actually more people without jobs right now than a month previous. This is due to the fact that the unemployment rate is only measured by the amount of people who are out of work and actually looking for new employment.
The actual work force, however, has not actually remained steady. The so-called underemployed increased their ranks by 0.1% in December from November’s numbers, only slightly less than the numbers attained in October when the underemployed rate hit 17.4%. These numbers include not only out of work people who aren’t actively looking for work, but also those who are hanging on only by working part time jobs while still searching in vain for full time employment.
These greater numbers of unemployed and underemployed workers are undoubtedly a contributing factor in the fall in demand for mortgages in December, combined with the seasonal drop that happens due to the holiday season. Over the last month of the year the demand for mortgages fell steeply and have made only a very minimal resurgence thus far in the new year.
A greater amount of consumer and business confidence is an essential factor in any economic recovery; financial recovery hinges on it. We need more than just incentive programs to prop up businesses and consumer spending; we need an increase in confidence in the economy across the board. Only when the public’s confidence is raised will consumers feel comfortable in investing their money in real estate as well as the rest of the economy; unfortunately, the economy will need to look like it is faring better before more consumers show a higher level of confidence in it.