Road to Recovery

In 2008, the US entered a period of recession caused by the housing market crash. The effects were wide and costly, resulting in many people losing their jobs and several companies going under. Aman Argawal ‘14 says “The financial crisis that rocked the nation 2007-2009 truly endangered the stability of not only America but markets across the globe. The over-reaching of the financial system into mortgages led to several foreclosures, bankruptcies, and pink slips in the long run”. Of all the industries that suffered through the recession, construction and manufacturing were hit hardest, as these companies were no longer needed, because people no longer bought homes and businesses could not rent out office space. By 2011, there was around 9% unemployment, and many were having doubts of whether or not the economy would improve.

On the eve of the release of the next jobs report, the economy is finally on the road to recovery after four years of recession. Source: Dave Smith

Recently, however, the economy has began recovering, albeit slowly. Last December, 155,000 jobs were added to the economy, dropping the decreasing unemployment percentage down to 7.8%. These increases were in the health care, food and drinking services, along with construction and manufacturing; these were some of the hardest hit sectors of the industry.

Auto sales have been on the rise as well, as 15.3 million vehicles were sold in the past year. This is a 13% rise from the previous year’s sales of only 14.5 million cars­­. J.D. Power Senior Vice President John Humphry says “Sales remain on a trajectory to return to pre-recession levels within a few years”. While this industry is slowly recovering, the housing market, which has suffered significantly through this recession, has also hit an incline.

There had been a slight dip in sales from December to November of last year, 19.9% from 2011, with a total of 367,000 homes sold last year. This was a new three-year high, reinforcing hope in a recovering economy. The increase of people purchasing houses can lead to many others receiving jobs in areas like construction, plumbing, and other housing related areas. With a recovering housing market, there are increased sales in the auto industry as well, in which there is more of a need for pickup trucks in recent time, thus driving profits up in that economic sector too.

Overall, progress is slow but steady, and it will take a few more years for the US to reach levels of economic strength seen under Clinton’s administration, which saw the financial industry grow exponentially, as well as an increase in median wages and shrinking poverty. Many still have hope, as Kevin Ellis explains “the reinvigoration of the American job market in the past couple years will most likely allow us to obtain those surpluses similar to those that existed during the Clinton Administration.”

Sources

  1. Lange, Jason, Reuters.com, “New home sales rise to three-year high in 2012” (2013).
  2. Tradingeconomics.com “The United States Unemployment Rate” (2013).
  3. Weissmann, Jordan, theatlantic.com, “The Recession Started 4 Years Ago, Guess Which Industry Is Suffering the Most?” (2011).
  4. Klayman, Ben, reuters.com. “January auto sales seen continuing 2012’s strong pace”. (2013).
  5. Memmott, Mark, npr.org. “Sales of New Homes Fell in December, But were up Sharply in 2012” (2013).
  6. Matthews, Dylan, washingtonpost.com. “The Clinton Economy, in charts” (2012).

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