Why is the economy now recovering faster?

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blog-author-paulbusino

Many ask themselves this question every day. It seems that the economy is starting to turn around but appears to be sluggish or slowly improving. I believe there are a few components that are causing a seemingly slow recovery.

 

  1. The Government: Washington continues to battle over the debt limit, and fears of a fiscal cliff have hurt the growth of the economy. There is also a point when excessive regulation creates an environment for companies to keep excessive capital reserves. When things like this occur, it has an impact on the economy. The liquid requirements, stress tests, and capital requirements on banks have created less capital in the market to invest in business. Let’s face it, it is harder now than before to be an entrepreneur or live the American dream. Over regulation is as damaging as under regulation. Many feel we have gone from one extreme to the other.

 

  1. Housing market: Our  country thrives during a strong housing market. It always has and always will. When new construction is booming everyone benefits. It has a trickledown effect on the economy that either directly or indirectly effects everyone in our country. While new home starts have been up in 2014, even that has slowed as we enter the second half of the year.

 

With the housing market impacting the economic recovery, maybe the better question to ask is “why are we not having a faster housing recovery?” That leads us into the third factor – lending guidelines – which will get its own post later this week.

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