The nation’s economic recovery will likely continue through 2011, but it will be slow, according to a University of Kentucky economics professor.
Ken Troske says the country’s gross domestic product is growing, but that may not offer much assurance, since unemployment remains high. As for Americans with jobs, Troske says they are unlikely to start spending again until the housing market improves.
“For most people, so much of their wealth is wrapped up in housing, and until the situation stabilizes in the housing sector, and as we stop seeing declining prices in major metropolitan areas and rises in foreclosure rates, consumers will remain very cautious, and that’s going to limit spending and other things.”
Foreclosures remain high in many areas, though home sales have increased in Louisville since last year. Troske made his comments on WFPL’s State of Affairs Thursday. Indiana University Southeast business professor Uric Dufrene was also on the show. He said many Americans have been saving money and paying down debt. While that can stave off an economic collapse, it doesn’t cause a recovery as quickly as consumer spending. But, the potential for spending is growing.
“At some point, you’ve got to replace the washer and dryer. At some point you’ve got to replace the refrigerator: it breaks. And so all of that will begin to kick in,” he says. “I think people will be surprised next year.”