Could the U.S. be headed for another recession? (part two)
Earlier this week, we looked at the aftermath of the United States government’s last-minute budget deal, which resulted in a downgrade of the U.S. credit rating and a 513-point plummet in the Dow Jones industrial average. Now, as economists survey the damage, many are predicting that a second recession is inevitable.
While this is not good news for the majority of Americans, it is especially troubling for residents of the Atlanta metro area, who have continued to struggle with a double-digit unemployment rate and an influx of foreclosure filings, despite the fact that the first recession officially ended two years ago. In recent months, Atlanta has showed some signs of recovery, but progress has been slow, and the most recent developments in the U.S. economic forecast will likely only make things worse.
According to Roger Tutterow, an economist at Mercer University, the housing market crash and stagnancy is Atlanta’s biggest block to recovery. This is because the housing market does not just affect homeowners. When the housing market crashed several years ago, the region lost jobs in construction, architecture, finance, and the legal field, to name a few. In recent months, the unemployment rate has climbed back up to 10.5 percent, dangerously near its peak high of 10.7 percent, which it hit last year.
In addition, the sheer number of foreclosures is weighing down an already difficult housing market, and homeowners have seen their home values plummet.
“We have been lagging, and I think we are likely going to keep lagging. That is simply because real estate was so important to the Atlanta economy,” he said. “And for middle-class Americans and Atlantans, a lot of their perceived wealth is tied to their home value.”
Source: Atlanta Journal-Constitution, “Recession fears grow after S&P downgrade hits fragile economy,” Henry Unger and Michael Kanell, August 8, 2011