Americans endured what was known as one the worst recession since the Great Depression of the 1930s in 2008. The housing market boomed and then crashed – everything else went along with it. The job market was brutal, and wages simply were not competing with the rapid inflation of those times. And even though the actual recession is technically over, we are still recovering from the damage that the recession has done 7 years ago. Even more, we have seen that the stock market in the past couple of days has shown dramatic drops. Ostensibly, this would indicate that we may be entering another recession that would parallel the one of 2008; however, there is not much need to worry, namely because the economy is doing just fine. Here are some reasons why you shouldn’t worry about the well-being of the economy. With the stable economy, you should feel no worries about taking out credit if necessary:
The Job Market is Improving
When the economy crashed seven years ago, it was becoming difficult to find decent jobs – indeed, many fresh college grads were taking on menial labor, or obtained jobs that had previously did not even require a college education! Companies were cutting left and right that year. The job market is still inflated today, but there are signs that it has improved dramatically since then. Consider that almost 3 million jobs have been added since 2012. The unemployment rate is 5.3%, and average weekly wages have risen 2.4%. Another aspect to consider that supports the improving economy is the national shortage of teachers. During the recession, there was a giant increase of the amount of certifications issued across the nation. Today, the number of teaching certifications issued has decreased by 50%. This would indicate that with an improving economy, more people feel as though they can obtain a more lucrative and more prestigious job than teaching (not that there is anything wrong with wanting to educate our workers of the future!).
House Prices
Making a purchase on a home almost always requires that you take out some credit in the form of a loan. Loans for houses, specifically, are called mortgage. When you sign a lease on a house, you will also set up a plan with the mortgage company (which is separate from the real estate company) about how you can pay off your loan. First, you will want to place a down payment on your home (an initial amount that you pay towards owning your house). The housing market started to boom in 2004 through 2006 – it then crashed, when the average price of a house fell by 10 percent. The decrease in home value had caused a chain reaction that consequently led to the recession. Fortunately, house values have been restored at least somewhat since then. The average price of a house rose 4.4 percent annually. With the increasing value of houses, owning a house is beginning to become a good investment once more. If you have good credit, you may be approved for a low interest rate mortgage. And if you sell your home, you will have the chance to sell it at a greater price than what you bought it for. Increasing your wealth means that you can pay off your debt quicker, thus improving your credit.
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Gas Prices
In 2008, Oil prices were at its highest at 145 dollars a barrel. Currently, oil prices are dropping dramatically – in fact, there should be a time where the average price for a gallon of gas is about 2 dollars! This may mean bad news for oil companies, who are now receiving less profit from their product and are forced to make cuts, but overall, this is advantageous for the economy, and it puts more money in buyers’ pockets. If you contrast the oil market today to 2008, it is clear that the economy is performing much better in this aspect.
Growth
The economy is finally beginning to grow – last year, it grew by 2.3%. While this is slow growth, it is certainly better than contraction, which occurred during the 2008 recession. The reason why economic growth does not seem as grand as it is is because of stagnant wages. While prices are increasing, wages are not increasing quickly enough to keep up with them. This has caused a decrease in spending and an increase in saving. Fortunately, economists predict that an increase of minimum wage will spur spending and thus stimulate the economy and bring it to a more robust state.
Conclusion
While there is still talk of a poorly-performing economy, research and data tell otherwise. The economy is not yet at the stage where it is booming, but it is performing well enough for us to be rest assured that we are not headed for another recession. Certainly, the situation here in the United States is far better than it is for countries abroad, such as China or Greece. It is worth placing our economic situation into perspective.
You, as a consumer, should take advantage of the improving economy by building your credit. Having excellent credit will allow you to take advantage of the opportunities available to save money. If you do not have a credit score or have a small credit history, then your best bet is to try to apply for a credit card.
