The Good and Bad Economic News for 2011 - Up and Down a Spiral Staircase - Page 2
Savings Rates:
The economy probably won’t improve significantly for a year or two but interest rates are already starting to inch up from the lows. That’s good news for borrowers but not great for savers who are getting almost no interest income. At least the long-term trend is improving and inflation isn’t expected to be a near-term problem.
Home buyers:
It should be a buyers’ market for the next year or two. As the economy starts to improve and workers are in a better financial situation, the buyers and sellers will come closer together this year. With the added inspiration of increasing interest and mortgage rates, people who have been on the fence about purchasing a home should be more willing to buy.
The aftermath of the recession has left longer-term negative consequences in some industries such as construction, real estate, and manufacturing. As we just mentioned, it will take a while before the demand for houses really picks up. Unemployment is still quoted at close to 10% but the real figure that includes everyone: people still looking, those who have stopped looking, and part-time workers who want full-time jobs, is much higher.
Now we come to the bad news, the areas that won't improve
Unemployment:
Over 15 million people are unemployed. Even with the government stimulus package, those who have been out of work for an extended period will have a hard time getting hired if they don’t keep their skills current and don’t move with the shifts in employer demand.
Undereducated:
Employers will be picky and will have a huge worker pool to wade through, so those who do not have a college education will suffer the most. The U.S. industries where there’s more demand for the less-educated worker such as heavy manufacturing and construction, are shrinking domestically and still struggling to turn around.
Shrinking employment needs:
As was mentioned earlier, the healthcare and energy sectors have not experienced a big downward shift in demand but other areas are still down and in some cases shrinking, such as publishing and low level computer programming. The combination of too many available workers and jobs being eliminated or going overseas will negatively impact the employment situation.
Government as employer:
Many state and local governments are trimming their budgets because revenues have been declining. President Obama is proposing a two-year pay freeze for government workers and many fire and police departments, schools and agencies are facing the possibility of layoffs and cutbacks. Increasing taxes won’t have much support when most people are struggling as it is. So, there probably won’t be an increase in demand for workers at any government level.
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