Economy recovery gaining further confidence

Reuters, an online community, whose purpose is to provide small business entrepreneurs with unbiased overviews, has released their statistics for July. Small business borrowing rose 2 percent from July 2009.  Business loans are notoriously low, while the country sustains high levels of unemployment. When unemployment numbers escalate, retail sales numbers plummet. When retail sales decline, employees decrease the number of their employees, creating a vicious cycle.

Lenders are still willing to extend credit, but small and large businesses are very reluctant to increase their debts. PayNet, which collects real-time loan information, has compiled data showing that fewer companies are delinquent on their existing loans. This, along with data released this week showing that consumer confidence is on the rise and home prices are increasing more than expected, seems to be a small ray of light sunlight at the end of the tunnel. Thus, indicating that we are not currently in jeopardy of falling backwards into recession.

Bank of America Merrill Lynch economists state “we are in a growth recession”. What kind of oxymoron is that?  Basically it means the economy is expected to continue growing but new jobs won’t be created and filled fast enough to make a significant change in the unemployment numbers.

With even more government jobs being cut in August, the outlook may appear rather dismal. It is, however, significantly enhanced by reports indicating that loan delinquencies are improving.

Economic recovery is a long, drawn-out process. You may not be feeling any relief especially if you are one of the ones that are unemployed or own a home that is worth less than you paid for it. Many markets are showing signs of improvement.  While predictions are tempered, they are still encouraging. We need to have patience, there are signs of life out there and the economy is rebounding, albeit slowly.

No related posts.