It’s Back..

Like Cousin Eddie from the “Vacation” movies, recession has made an unwelcomed stop at the U.S. economy.  Since 1854 the U.S. has experienced 32 cycles of economic growth and pull backs.  Since 1980 we have had 4 recessionary periods.  A recession is defined as a decline in economic activity measured by:  unemployment, incomes, production and consumer purchasing.  The government tries to prevent or at least soften the effects of economic pull backs or recessions by tax cuts to give us more money to spend and decreasing the fed rate to help banks borrow money.  The real estate market weakens before recessionary cycles. This time the real estate market is therecession.   To quote Gary Schlossberg, economist at Wells Capital Management, we are more in a “fear-cession” than a “recession”: businesses and the government are taking steps to avoid a full blown, long term, recession. He also pointed out that housing prices have fallen 20% or more in some markets, but between 1998 and 2006 that there was a 225% increase in home prices in some areas. The two worst recessions were in the 1930’s and in 1982.   Farmers were losing their farms in 1982 when crop prices plummeted along with all of the other economic issues, and in the 1930’s dry, windy, weather killed the crops.  Today, the farmers are doing well and changing the model.  So maybe if this is a recession, like Cousin Eddie, we will have to withstand some annoying times before it quickly moves on.