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Thursday, April 1, 2010
The Declining Middle Class
The New York Times has been running a good series on the impacts of the crisis on people. Many people will never recover from this recession in terms of their quality of life, incomes, and wealth. The Times article called them "The New Poor." Yesterday, one of the regional Fed presidents talked about the same issue. His point was that the fall in construction sector jobs was permanent. This, coupled with foreclosures, will create many of those New Poor. He also talked some job creation numbers that will be needed to bring down the unemployment rate. Sad and sobering, in my opinion.
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It is sad but I suppose in a few weeks when we read all of those accounts about how this recession isn't different from past recessions we will find that a lot of those recessions had similar hallmarks and sentiments that generally did not end up being reality. But, I'm just hypothesizing.
ReplyDelete--Tommy Turner
I think that it will take a long time for certain sectors to ever recover from this recession especially the construction sector which was pointed out. There are so many houses for sale at a lower price, why pay for a newly built house when you can purchase that foreclosed house at a severely discounted price? Especially when a lot of those houses are very nice because a lot of people could not afford them because of their skyrocketing mortgage payments.
ReplyDeleteLike Tommy said I hope that the negative aspects of this financial crisis turn out to be speculation and not reality. It is amazing to see how large of an impact this financial crisis has had on the people around us. I thought I remember reading that at one point there had been nearly 900 foreclosures in the Kalamazoo area, a pretty significant figure for a relatively modest town. And a figure that shows how many people will not be able to recover for a long period of time and will most likely not enjoy the standard of living they were used to before the financial crisis.
ReplyDeleteI believe that there is some truth here especially if we consider that for many people they will never have the quality of life, wealth or income that they had. Rob makes a good point that we may not enjoy the standard of living we had especially for families who have been working in the most affected and dying sectors. I think we will see a stronger push and creation of jobs in different sectors. CNN has reported that this past month the Labor Department reported the economy gained 162,000 jobs. It may be a time where those working low income jobs will struggle even more but this struggle will push many of those who cannot afford to work in those sectors to innovate or re-establish themselves into another market. We very well could see an older sector once again regain some ground.
ReplyDeleteI agree with Jared that it may take a very long time for the construction sector to bounce back. However, I disagree that the construction sector is completely dead. My dad besides teaching has been building houses for 35 years. In Northern Michigan the construction sector has suffered quite hard and there are many young adults that can barely afford to put food on the table for their families. However, even with very few houses being built there are always projects to be done and remodeling. My dad says that he has told many of these young males who he has worked with that they should consider going back to school or finding another market to work in for the meantime. I believe the construction sector will one day once again be back but for now so many have chosen to move back into cities as rural areas are struggling.
It is no secret that the construction business has suffered greatly due to the economic collapse. Many cities and communities were overdeveloped during the housing bubble and has basically eliminated the concept of developing because there is such a great surplus. Michigan has seen even larger effects because many construction projects stemmed from the automotive companies. I don't believe the loss of construction sector jobs are permanent. Many jobs have been created in the deconstruction of several plants and factories throughout southwest and southeast Michigan, and several hospital and other health care related projects have fueled new construction jobs in the last three or four years. Although the industry is not flourishing as it was back in the late 90's, I think we will begin to see new development within the next five years.
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