Monday, May 11, 2009

When Will We Recover From the Recession?

In April, Time Magazine did a telephone poll asking 1,000 people, "What is your best guess about how long it will take before the economy begins to recover?" Here's what they said:

Six months - 12%

One year - 26%

Two years - 24%

Three years - 9%

More than three years - 11%

Start of a long term decline - 14%

So what about you? What do you think?

Me, I tend to be in the 1-2 years camp. I am hoping for one year, but expect it will take closer to two. Of course some of this will go area by area. I heard something on NPR the other day where a pundit suggested that some areas (he used Florida as an example) were hit particularly hard by the economic situation because they were not expecting it, however, because they have very diverse economies, they are expected to recover fairly quickly. On the other hand, my home state had been sliding into an economic downturn for years before the rest of the nation felt it, and we aren't expected to recover nearly as quickly.

To be honest, I have only lightly been effected by the recession, which is pretty funny considering I write a blog called "Fighting Foreclosure." But as most of you long time readers know, my financial problems came from divorce. I still have my job and have been able to hold onto my property, but that isn't to say that the recession has completely passed me by. Long before the government started talking about bank bailouts, there was the housing bubble and its subsequent collapse. I bought my house at the peak of that housing bubble believing, as many did then, that "real estate always increases in value." Ha! In addition, I work in a field related to the housing market. I've seen our company shrink from 70+ employees to 12. Once upon a time we used to get profit sharing, but we haven't seen that in a couple years now. The company was always careful to let us know that profit sharing was never guaranteed, so fortunately I never relied on it exclusively, but I surely wished I had saved a lot more of it! Man, that money would be handy now.

I have seen several good friends hurt by this though...

I know quite a few people who have been laid off due to financial cuts made by companies. One of my friends, a full time employee, had two part time gals working for him. The company wanted to lay off the part timers, but instead my friend stepped in a offered to be cut instead. He saved both their jobs and is working on building his own business. I love stories like that - they give me hope.

I would like to see the economy turn around though. I think it is great that it is getting so many people to refocus their attention to what really matters in their lives, but I hate seeing folks needing work and not being able to find it. The silver lining of people paying attention to personal finance in new ways and companies running leaner and being more aggressive is great, now we just need employment to open back up.

What do you think? When do you think it is going to turn around? Have you been effected personally? Tell me your recession recovery thoughts!

Photo by: RogPool


Kari said...

I know this is going to sound weird and maybe a little bit selfish but I'm hoping you are right and it takes this area closer to 2 years.

With filing for bankruptcy and then fixing my finances I'll finally be able to buy a home. Only, I can't afford a home if the prices go back up. I can reasonably afford about $500-600/mo for mortgage and all it entails so in order to get a home in a safe neighborhood I need the housing to stay down.

Otherwise I'm stuck renting for a very very very long time. There is no sure way to know my housing costs will stay low enough that way either.

I think though we have hit the worst of it all, I don't think it will get any worse than it has been and things are progressing. It will take some time though. A couple of years is what I'm thinking.

Dawn said...

Kari - Actually I just read this morning on someone else's blog that they hope the recession lasts a little while longer, so you aren't alone! It is funny, I'd like to sell my home, so that is part of the reason I want the recession to end. You want to buy a home, so you want it to last a little longer! I guess that is how it always works out.

Divorced Lifestyle said...

I'm hoping it lasts a little longer, but I'm getting a good vibe at work these last couple of weeks. I may just get hired permanently!

I've been temping a year, want to buy a house, saved a downpayment, but I won't bite the bullet until I have a permanent job.

Of course, I know there are no guarantees, but I'll feel a little more secure if it's perm and not month to month.

Simplelivin' said...

I'm with Kari in selfishly hoping it last a little least with the housing. Hubby and I both has secure jobs, and would like to purchase a home once we are out of debt.

I know that some houses are still on the 5 year ARM and will be coming to term till the end of this year (or maybe next year?).

Dawn said...

Divorced Lifestyle - I don't blame you! I would want that assurance from a permanent job as well. Of course nothing is set in stone, but that would make me feel better too.

Simplelivin' - It is a great time to buy. I imagine there will continue to be some fall out, as you said, there are some ARMs that haven't matured yet.

Kari said...

Gosh, I was coming back because I felt so guilty for feeling that way and I find I'm not alone. Wow!

I feel guilty because I remember it is real people who made some poor financial decisions with the knowledge they had at the time and maybe some who didn't as well. People who are becoming homeless.

It is such a tug-o-war in my heart.

Dawn said...

Kari - yeah... I just want to see my friends all working again. I see the benefits of the recession, but also the people hurt by it.