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2-3 Year Supply of Foreclosed Homes Means Economic Recovery Will Remain Weak

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28% of all home sales in the first quarter of 2011 were foreclosures.  In a healthy economy, that number doesn’t rise above 5%.

158,434 homes in some stage of foreclosure sold in the first quarter.  With around1.9 million homes remaining in foreclosure, the supply of just these types of homes will last between 2 and 3 years.  If no other major economic disruptions occur in the meantime, it will only be after that time that any economic recovery from 2007 can truly occur.

I’m not an economist, but I don’t see that as likely, quite frankly.  Seven years after the last recession started will be a prime time for another to start.  And the Federal Reserve and Treasury Department has done more to prop up billionaires than lower and middle class Americans, despite the fact that the latter sets are what actually drive the U.S. economy toward growth.  Moreover, those two institutions have run out of actions they can take.  Interest rates continue to hover near zero for banks (not that you and I see any tangible benefits) while trillions of dollars (literally) have been loaned to banks at those near-zero interest rates.  And that’s only a couple of examples of how close to the end of the string they are.

What left?  Well, the government abdicated its responsibility to ensure that a large enough economic stimulus was provided in 2009.  Politicians of both major parties refused to listen to economists who were experts on how we exited the Great Depression.  As a result, we’re left with a tepid economy and even worse disparate wealth differences between the top and bottom than prior to 2007.  I don’t see the situation improving appreciably any time soon.

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