There have been recent signs of economic improvement and glimmers of hope that progress will continue. The economy is contracting at a slower rate and economic activity is gaining momentum, but these strides do not mean that a full scale turnaround is about to happen. A complete rebuilding of the economy is going to take time, patience, and ongoing immense efforts. Conditions in key markets—housing, credit, and financial—will need to dramatically improve and confidence will need to be restored before a stabilization of the economy begins to take form. But, the recent positive steps are encouraging and provide reason to feel more optimistic—here are some of these positive steps:
- Inter-bank lending rates have been reduced to a record low of near zero, pushing mortgage rates to record low levels. This provides unprecedented opportunities for homeowners to refinance and improve their financial situation. Rates have been reduced to help stimulate real estate activity, boost sales prices, and generally assist the housing and financial markets.
- Recent data suggests home and auto sales, home-building, and consumer spending are on the rise. This increased activity is important because it lowers inventory levels and helps support increased prices of residential homes.
- The demand for refinancing is high and is expected to be the 4th highest on record.
- The government’s actions are creating some stability in the economy, allowing the credit markets to begin functioning in a more normal manner. This means access to loans for homes, cars, and small businesses is getting easier.
- Many of the risky loans banks made that caused complications are no longer available and have been being replaced by loans that are healthy for the economy.
- The stock market is rebounding, and investors’ confidence levels are improving.
With these signs of progress, evidence that the economy has hit bottom and is making a recovery is becoming clearer. As job losses and home prices stabilize and inventory in consumer goods reaches normal levels, the economy will once again grow. So, yes, economic optimism is on the rise!
