The economic outlook for 2010 appears to be improving. Stocks, at least, are rallying this morning in early trading. Many analysts expected measured improvement for 2010. However, it is clear that even with growth, the economy is not going to turnaround quickly. In fact, it is likely that the economy continues its improvements at a relatively slow pace in 2010. This could cause some disappointment for some, who continue to insist that the economic recovery should be moving more quickly. However, it is important to note that a recession nearly a decade in the making (with foundations set through two decades before) isn’t going to just snap out of quickly.
Some of the main obstacles that continue to provide a drag on the economy include employment and housing. With unemployment continuing to grow, even though its pace has slowed, consumer spending can’t pick up, and neither can the housing market. Housing has its own problems, with inventory still high, and construction spending down as demand for new properties remains tepid.
Until things start turning around in terms of employment, the economy is not likely to improve. However, companies are still in cost-cutting mode. Until they start seeing a bigger increase in consumer spending to boost their sales, companies are unlikely to hire. You can see how this cycle stands to keep economic growth slow.
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