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Still Plenty of Worries Despite Signs of Recovery
There’s plenty of good economic news these days, but challenges remain.
A major hurdle remains the public mood. Last month’s Consumer Confidence Index from The Conference Board took a major, unexpected dive. That can be written off as a fluke, but the Jitters Index from CNW Marketing Research reached a record high of 7.24 in February. And the previous high was set in January.
The Jitters Index is a survey of consumer concerns. Taxes, both state and local, are among the highest worries for consumers CNW polled.
Then there is the issue of commercial real estate. A great amount of commercial real estate debt comes due in the next 18 months. Regional banks hold about 40 percent of that debt, said Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers. Those banks are a primary source of floor plan money for dealers.
“Cars are more expensive, they’re hard to find and they’re harder to pay for,” Shilson said.
These factors alone won’t derail the recovery, but it looks like a slow process. Writing on the Manheim Consulting blog, economist Tom Webb said he expects job gains to begin this month. But he warns of a long-term shift in the labor market that’s bad for the used-car business.
The spread in the unemployment rate between college graduates and those with less than a high school education widened to 10 percentage points in 2009, after averaging only five percentage points in the previous two decades, he wrote. Since most used-car buyers have less education, their employment prospects will remain limited.
The situation is even worse for inexperienced workers. The unemployment rate for persons 20-24 was 16.6 percent in February and, for 18- to 19-year olds, it was 25 percent, Webb wrote.
Finally, because unemployment rose through the nation in the past year, there’s nowhere the unemployed can move and find a job.
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