Economists and consumers are feeling better about the economy a year after the most frightening moments of the financial crisis. Forecasters surveyed by The Wall Street Journal, giving the government generally good marks for its handling of the financial crisis, now see employers slowly adding jobs over the next 12 months.
And the latest reading of consumer spirits shows signs of optimism. But most economists still expect the unemployment rate will climb to 10.2%, from today’s 9.7%, before falling early next year.
“We are in a technical recovery, but risks remain abundant,” said Diane Swonk of Mesirow Financial. “It will still take some luck and skill to get Main Street to feel some of the relief Wall Street has felt.”
I still think that the other half of the recession has yet to hit. The consumer credit issue has not been resolved. As unemployment rates rise while spending falls and credit card defaults rise, the merchants on Main Street will be having a tough time covering their leases. As those leases are breached or lapse, there will be a new crisis of commercial real estate insolvency.
Hold on to your hats…and wallets!