Working Together For The Economy Essay

1447 words - 6 pages

Throughout its history, the United States has gone through many economic cycles which involve economic peaks and recessions. With these recessions comes a time of recovery and rebuilding; jobs are lost, money in the economy does not circulate, and industries fail. However, all industries and markets must work together in order to lead the economy back to recovery and stability. Currently, the United States is undergoing a recession and signs of industries and markets working together can be seen, such as the housing and labor markets. The housing market is setting mortgage rates at record lows while the labor market is increasing employment. By stimulating consumers into the economy and generating income for consumers to spend, the housing and labor markets will assist the United States back to recovery, stability, and economic prosperity.
The United States housing market has been greatly affected by the recession because of the effects it has had on other markets and industries, such as the labor market. During the recession, the labor market had seen a dramatic increase in unemployment. Unemployment leads to consumers spending less money in the economy because of a lack of household income. Consequently, the housing market is taking a big hit. Many consumers are not willing or able to put money into the housing market to buy or rent homes; furthermore, consumers are not able to pay high mortgage rates. To generate activity in the housing market, mortgage rates are at all-time lows. As of January 2014, the average thirty-year fixed mortgage rate was 4.32 percent and the average fifteen-year rate was 3.40 percent (Gopal). These rates can be compared to December 2013 rates which were 4.48 percent for fixed thirty-year rates and 3.52 percent for fixed fifteen-year rates ("U.S. Mortgage Rates Drop to a Two-Month Low"). However, the lower mortgage rates have not increased activity in the housing market, as sale of pre-owned houses fell by 8.7 percent and sales of new homes fell by 7 percent (Gopal). The lack of activity, even with large incentives, is due to unemployment. Those who are employed are more likely to have a mortgage approved; therefore, the current unemployment is causing the housing market to lose consumers (Gopal).
The lack of response to low mortgage rates shows that no one industry or market will be able to stimulate economic growth, other industries and markets must join in. The labor market has taken initiative and has made changes, such as adding jobs to the economy in order to lower the unemployment rate. When the United States economy first went into its recession in the years 2008 and 2009, 7.4 million jobs were lost. Since then, there have been over 7.2 million jobs created, which is a 97 percent recovery of “employed persons” in the economy; furthermore, unemployment is at a five year low, sitting at 6.7 percent (Green). These changes in the labor market are crucial for success. Increasing employment throughout the United...

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