The recession may be over, but consumer and business debt – coupled with rising foreclosures and unemployment – will make for a slow recover.
“Although the worst recession in seven decades likely ended in the current quarter, its negative effects will linger will into the next decade.”
Unlike many past recessions, the latest one was spurred by consumers and businesses taking on too much debt rather than imbalances in the “real” economy.
Because of that, not only will financial institutions be less willing to lend, but consumers and businesses will be less willing to borrow.
“This process differs from normal recoveries where there is a natural inclination to borrow and spend after a period of Fed tightening that induced recession in the first place. This time around, the Fed started easing monetary policy well before the beginning of the recession, but the economy is only now showing, “hopeful signs of recovery!”
Excerpts taken from Inman News, September 16, 2009