Foreclosures Still Racking Economy

Time to ask the question again: Is it over? An article in The New York Times notes that “the economy remains pitifully weak” and adds the government “has failed to find solutions” to home foreclosures. Treasury announced a plan this spring to stem four million foreclosures, but only a few thousand have been modified so far, and a new wave seems imminent as moratoriums imposed on foreclosures are now running out. Another article in the Times looks at how the economy might emerge from the wreckage: “I expect that the savings rate will end up at the end of this recession higher than it was going into it,” says a finance professor from Northwestern. The Times notes “Sustained increases in household saving would cause a difficult period of restructuring for the American economy, which has become increasingly driven by consumer spending. Such spending makes up about 70 percent of the nation’s gross domestic product.”