Meltdown in housing market, faltering job creation cited
WASHINGTON – Empty homes and for-sale signs clutter neighborhoods. You’ve lost your job or know someone who has. Your paycheck and nest egg are taking a hit.
Could the country be in recession?
Sixty-one percent of the public believe the economy is now suffering through its first recession since 2001, according to an Associated Press-Ipsos poll.
The fallout from a depressed housing market and a credit crunch nearly caused the economy to stall in the final three months of last year. Some experts, like the majority of people questioned in the poll, say the economy actually may be shrinking now. The worry is that consumers and businesses will hunker down further and pull back spending, sending the economy into a tailspin.
“Absolutely, we’re in a recession,” said Hilda Sanchez, 44, of Waterford, Calif.
For many, the meltdown in the housing and mortgage markets has proved especially disturbing. Record numbers of people were forced from their homes, unable to afford the monthly loan payments. People watched their single biggest asset fall in value, a reason to tighten the belt.
“Obviously the housing market is creating deep concern. And one of the real problems could be that if people, as a result of their value of their homes going down, kind of pull in their horns,” President Bush said in a television interview aired Sunday.
Credit has become harder to get, thwarting would-be home buyers, adding to the glut of unsold homes and aggravating the housing industry’s woes.
For all of 2007, the economy grew by just 2.2 percent. That was the weakest performance since 2002, when the country was struggling to recover from the last recession. The housing collapse was the biggest culprit in 2007. Builders lowered spending on housing projects by 16.9 percent on an annualized basis, the biggest drop in 25 years.
The job market is faltering – a point driven home by a report showing that employers cut jobs in January for the first time in more than four years.
“The way things are, people are afraid of losing their jobs,” Sanchez said.
So if the poll figure of 61 percent is right – that the country is now in recession – then relief efforts will help ease the effect of a downturn.
“People are both depressed and anxious about the state of affairs. The anxiety is going to persist because we are in an uncertain season economically and politically,” said Terry Connelly, dean of Golden Gate University’s Ageno School of Business.
• 61 percent: Believe the economy is now in a recession.
• 59 percent: Say they were worried “a lot” or “some” about seeing the value of stocks and retirement investments drop.
Source: Associated Press-Ipsos poll, based on the responses from 1,006 adults surveyed Monday through Wednesday. Results had a margin of error of plus or minus 3 percentage points.