With all the good news out there, it’s almost as if the economic downturn never happened, the 2008 financial crisis a nonexistent emergency. The stock market continues to climb to new heights. Trulia’s Chief Economist Jed Kolko confirms national rising home prices aren’t a bubble prone to burst, but are a reflection of an actual rebound. Unemployment rates are down. The state of California, for the first time since 2001, is at a budget surplus. It seems the sky is the limit, but we must not forget where we have been.
Before the stock market crash of 1929, it saw an unprecedented surge. It took 20 years for it to rise to that level again. Before the 2008 recession and the failure of many major banks and mortgage companies, the stock market was steadily climbing, just as it is now. Housing prices spiked exponentially in 2005-06 before the bubble burst, which was followed with the foreclosure completion rate skyrocketing from less than 25,000 for the fourth quarter of 2005 to more than 100,000 for the third quarter of 2010. Foreclosure filings spiked from less than 50,000 for the second quarter of 2005 to more than 200,000 for the same time period in 2009. Unemployment numbers always went up during economic hardships and fell during war times prior to the wars in Iraq and Afghanistan. To be at war and have unemployment rise exponentially over the last decade was unusual. The end of the wars in Afghanistan and Iraq and the surging stock market seem to present uncharted territory for the future of unemployment rates. And with every budget surplus in California, or even for the national budget, years of deficits always followed.
It’s an exciting time to watch as we not only recover but begin to prosper, but now is not the time to celebrate these accomplishments with careless spending and unwise investing. While it feels as though we are gaining traction with gusto, it’s still a very fragile time as the nation and California stabilize economically. Further — the elephant in the room — despite the fact that the Commerce Department confirmed that consumers are feeling more confident about the economy, with increased retail spending for the month of April, edging up 0.1 percent, the average credit card debt per household is $15,162. This indebtedness shows just how fragile our economy is, that we are generally spending more than we are making and the $11.25 trillion credit card debt owed by American consumers, if not repaid, could collapse our economy.
It appears that we are headed toward times of prosperity, but quoting from Spanish philosopher George Santayana, “Those who cannot remember the past are condemned to repeat it.” It is time to forge ahead carefully and proceed with caution. No one wants to have to live through more tumultuous times, so let’s not forget where we have been.