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We'd all love to be optimists, and history has had its share of recoveries, but the fundamental premise that we're in a tough economic environment is true.
Let's face it:
- The cost of gas is almost 3x higher than it was in 2000 and Americans are driving less
- Even with the market correction, housing prices have close to doubled in major metro areas
- Housing costs have outpaced incomes (link 2)
- Food prices (particularly staples) have spiked
- Foreclosures are up 121 percent compared to Q2 of 2007
- Consumer confidence is down, and despite a minor bump in July, is half of what it was a year ago.
- Consumers had $962 billion due on credit cards in May, up from $897 billion a year earlier, according to Federal Reserve data.
- 100 U.S. lenders have suspended their government-backed student loan programs
- Inflation is more than it's been in 17 years
- The percentage of uninsured has risen from 14 percent to 16 percent in the past decade. Of all people under 65, about 47 million are uninsured.
- When adjusted for inflation, the minimum wage (despite increases) has fallen 22 percent
...but the median household income has been relatively flat for years.
Everyone can put an optimistic spin on those issues and say everything can only go up, but frankly, I'd hate to be in my teens or 20s right now...or a low wage earner. Just looking at our local market here - with housing prices far outpacing income increases (particularly when normalized against expenses) - it's a tangible issue.
The OP mentioned being "cautious" in today's market. Without commenting on his (or her) analysis, I'd say a little cautiousness is prudent.
And I think it's perfectly legitimate for people to question whether or not -- at least for the short term -- the market has really "bottomed out."
Wonderin wrote:
FICOScott, all good points, BUT I don't know if you noticed it, but most of the issues you cite can be attributed to effect of inflated gas prices.
Food? Takes trucks to ship the food items to the local stores (not even mentioning the gas costs in production, shipping the materials, etc). Higher gas prices = higher prices, period. The goods, even TVs, and such, aren't going to walk themselves there!
Housing prices in metro areas increasing? Of course! You don't see many jobs smack-dab in the middle of Suburbia, do you? Nope, they're usually clustered in metropolitan areas. With gas prices, the less you drive the better. I know oodles of people who have sold their homes (or ARE selling) and moving closer to work.
A lot of those people will be "blue-collar people" since a lot of "white-collar" employers are offering 4 day work weeks to offset the cost of gas. Oftentimes, they're already in a precarious financial situation (not trying to be snotty, here). They work more hours, get paid less, etc.
Heck, even in my teeny-tiny burg, the big contracting companies already offer 4 DWW ... and the military agencies are pushing it, too.
But the bottom line is that while, yep, caution is a GOOD thing (always has been, always will be), it's not necessary to go all "Doomsday" and "Apocalypse." If everyone would please just stop pitching a fit and contributing to MORE "consumer misconfidence" everything will "right itself" soon.
(And yes, "misconfidence" is a real, government-created word )Glad to know I'm not alone in my sanity.
@jaybird201 wrote:Glad to know I'm not alone in my sanity.
jaybird201 wrote:FICOScott, I must say you do appear to have too much time on your hands to have linked all of your statistics......Do you believe in aliens FICOScott?
....
Take an economics class and learn about the fundamentals of financial markets rather than making a bunch of assertions about how the economy is in the crapper and going out and finding stuff to support you.
PittsburgPamela wrote:Today's market is the best opportunity for buying a home that many people have had in 10 years! I bought my first home as a single person 8 years ago and paid $198k, which was about the lowest I could get for a half-way decent neighborhood. I sold it 3 years later for $325k, I wouldn't even have been able to afford to buy my own house at that price. I then bought a $347k house with $70k down and that was about the limit that I could afford 4 years ago too, a mortgage of $277k.Then the huge surge in home prices and houses around me were selling for over $500k! (Dang, I should have sold). Then the bubble burst and prices are back to the high $200k WHERE THEY REALLY SHOULD HAVE BEEN IN THE FIRST PLACE!!!
Wonderin wrote:
But the bottom line is that while, yep, caution is a GOOD thing (always has been, always will be), it's not necessary to go all "Doomsday" and "Apocalypse." If everyone would please just stop pitching a fit and contributing to MORE "consumer misconfidence" everything will "right itself" soon.