467,000 more jobs lost in June.

[Kasz216]

NJ5 said:

TheRealMafoo said:

Not sure I agree. The cause of this recession is to many houses. Everyone gambled that the wealth of there homes would go up indefinitely. As soon as builders caught up, house values dropped, and everything else is now based off that.

The single biggest component in American personal wealth is home ownership. Inventory of homes is to high, so that value is not near what it used to be.

This is to blame for everything we have seen going forward, so it is an inventory problem.

The inventory based recessions are when manufacturing has to be lowered for a while. In those recessions, factories are idled while inventories are consumed, then when they resume production people are hired again so unemployment gets fixed at the end and after the recession.

You are right, people are poorer due to the value of their homes, but also due to having too much debt. As credit gets harder to come by, and interest rates go up people have less and less disposable income to spend. This is a big part of what's causing the recession, the fact that the consumers are getting hit directly (and consumers are like 70% of the US economy or so I've read many times).

As people get unemployed, that causes more home foreclosures and defaults on debt, which makes people poorer. This causes even lower consumer activity, making the recession bigger. It's a very bad vicious circle which won't get fixed without unemployment levelling off first.

 

A lot of construction workers are out of work.  Even the ones in demolition.