Austin is one of 79 metro areas across the country to be officially out of the recession, according to Moody's. Although the state of Texas is still considered to be suffering the constraints of the recession, Austin and seven other Texas cities have been given the all clear. This determination was based on an index that included employment, housing starts and home prices.

In fact, the latest poll of economist says that at least 80 percent of them agree that the recession is over. Unfortunately that piece of good news may not mean whole lot as the American economic landscape looks completely different than it did two years ago. The survey by the National Association for Business Economics released recently said to expect a slow recovery. Here are some reasons the recession recovery may be slow:

Unemployment
There seems to be little doubt that the unemployment rate, which is currently 9.8 percent, will reach 10 percent by the first part of next year. Even with the number of new jobless claims down for the fourth week in the last five, layoffs continue. Federal Reserve Chairman Ben Bernanke has warned that unemployment is likely to remain above nine percent through 2010.

Consumer Spending
Worries over unemployment affect consumer spending habits, even of those Americans who have jobs and job security. The personal saving rate is up for the first time in two decades and the cautious spending that began during the height of the recession has not changed appreciably in recent months. For example, when gas prices hit the $4 per gallon mark in the summer of 2008, people significantly changed driving habits. The annual American Community Survey showed that the numbers of Americans commuting to work, a habit stared during the high gas prices, remains the highest number in more than a decade. People are generally not eating out as much or making as many big purchases. It remains to be seen if holiday spending this season will help revive the suffering retail sector.

Real Estate
The economists surveyed expect housing in 2010 to contribute to the overall growth of the economy for the first time since 2005. However, the census data shows that less people are moving these days, with population trends to the sunbelt states actually being reversed. Real Estate prices nationwide are down and the percentage of Americans owning homes dropped to 66.6 percent this year from the high of 67.3 percent in 2006.

Credit
Even with the Dow Jones industrial going over 10,000 and banks reporting billion dollars profits, credit remains tight. A recent report from the Federal Reserve shows that households have reduced their borrowing for the seventh straight month, while at the same times banks are lowering credit limits. Banks seem to be enemy number one when it comes to this recession, yet they have to play an integral part in the recovery. Until credit for both businesses and individuals starts flowing again, employment and housing is likely to remain stagnant.


Ki lives, and works, in Austin, Texas. His site provides potential homebuyers a free search of the Austin MLS. He also provides detailed information about Austin real estate on this site along with profiles of neighborhoods like Westminster Glen in central Austin.

Is the recession near the end? Is the American economy on its way to recovery? The answer is probably yes. That's good news, right? Not so fast, say some economic analysts. And they mean, literally, that the stock market may be rebounding a little too quickly.

According to a recent report at Yahoo Finance, the stock market's rally in recent months is a bit of a mixed blessing. The hope that the economy is on the rebound "has lifted the Standard & Poor's 500 index, a benchmark for many investments like mutual funds, an enormous 39 percent from a 12-year low on March 9. Those kinds of gains might normally take four years to materialize."

Both being too quick to call it a recovery and not cautious enough in investing could cause this budding economic upturn to wither on the vine. The numbers remain mixed, with the number of job losses in the month of May are down, but unemployment is up. While the government's report of 345,000 jobs lost is the lowest since September, the actual unemployment rate is 9.4 percent. This indicates that although less people are being laid off, it is still very tough to find a job out there. In fact, the overall number of job seekers rose as college graduates flood the job markets.

Even Federal Reserve Chairman Ben Bernanke has said, even once the economy begins to recover, jobs will be the last sector to rebound. But there are still other troubling signs out there. Recent Commerce Department data shows that May retail sales were mixed, but in general analysts were surprised that more shoppers hadn't returned to stores. Wall Street may be throwing caution to wind, but Main Street seems to be holding onto their cash, with the savings rate up again last month.

One of the biggest downfalls of overzealous investing is that investors are helping push interest rates higher. According to Yahoo, investors have been selling off Treasury bills because they feel they are no longer in need of the safety of government debt. This causes mortgage rates and other kinds of loans for consumers to rise. Interest rates are still historically low, but they have been creeping up in the last few weeks. As the interest rates goes up, borrowing is falling off. The Federal Reserve reported last week that consumer borrowing in April fell by twice as much as analysts had been expecting.

The latest results of the AP's Economic Stress Index, which tracks the economic strains in 3100 counties across the country, show that many areas of the country are struggling more than they were a year ago.
"The AP calculates a score from 1 to 100 based on each county's rate of unemployment, foreclosure and bankruptcy, with lower numbers indicating less economic pain. The average Stress score dipped to 9.7 in April, from 10.3 in March. In April 2008, the national average was 5.9."

So while most indications show improvement in the economy in the first part of 2009, a slow, steady recovery is more likely to help this nation that has been stressed in so many ways over the last year and a half. After all, exuberant investing is what got us into this mess in the first place.


Ki lives and works in Austin and has worked in the Austin real estate market for 10 years. He maintains a search of Austin MLS on his website. It also has general information on Austin real estate and current mortgage rates