by Economic forecasters are telling us that we are now in “recovery mode” after the record-setting financial collapse which left the US economy in the worst recession since the Great Depression. At the moment, across the country, there is a huge oversupply of homes for sale, empty office buildings and a frightening debt burden. Yet forecasters are optimistic that recovery is underway.The bad news is that, despite the fact that indicators are heading up, the hole we find ourselves in is so deep, that at today’s pace it will take many years to reach the economic heights our economy toppled off of. According to analysts the current rate of job creation will take about nine more years to reach the employment rate which existed before the collapse. This figure is optimistic because it doesn’t include about 5 million additional people entering the job market in the next nine years as a result of our growing population. Even the Obama camp has mentioned that the number of unemployed could continue to rise.Home prices have plummeted by 20% since 2005. If inflation stays steady at 2%, which most say is likely, it would take a long 13 years to reach the highpoint from which they fell. Commercial rental space is also in the doghouse, with vacancies still increasing. In the largest cities some are saying it could take 10 years to fully absorb the excess. One example is in Atlanta, where the Bank of America building, the tallest office building in the Southeast, is close to 20% vacant, and the bank just re-negotiated their rental agreement with a rent-cut from the developer. In cities like Las Vegas, Phoenix, Dallas/Fort Worth and Atlanta the vacancy rate is hovering about 20%, and in all of these cities the rate is higher than it was last year.To tackle this grim situation and dreary forecast of a recovery that looks just like a recession to most, the Federal Reserve is debating whether to introduce more extreme measures to help improve things more quickly. Allen L. Sinai, a global economist for the consulting firm Decision Economics, is not surprised that there is a gloomy mood in the US now. As Mr. Sinai put it, “No wonder Americans are pessimistic and unhappy. The only way we are going to get in gear is to face up to the reality that we are entering a period of austerity.” It seems Americans will be forced to swallow this bitter pill, whether they want to or not.
