Things will no doubt get worse in the short-term, but there are glimmers of hope here and there that the economy may in fact be on the precipice of turning around sooner than later.
This recession had its roots in the subprime-housing bubble that burst, bringing down a major sector of our economy and the financial markets with it. But several changes have occurred on that front that bode well for the future of the housing industry.
Mortgage rates have fallen to a little more than 5 percent on average in the past couple of weeks, and it's likely they will fall further in response to the Federal Reserve's latest interest-rate cuts and other initiatives it is taking to bring down fixed 30-year rates to about 4.5 percent.
Combine this with falling prices for new and existing homes, and you have the makings of a sharp upswing in home buying and a recovery in the real-estate markets. There's already been a sharp rise in mortgage applications and in refinancing as a result lower rates. I expect them to fall even further in the weeks to come.
Add to this a slow but gradual opening in the lending markets for creditworthy applicants. Despite the perception that Treasury Secretary Henry Paulson's injection of nearly $350 billion into the financial markets has not effectively unclogged the nation's credit arteries, there is growing evidence in the banking sector that loans have begun flowing again to borrowers.
So much of our recovery depends on global economies, and here, too, there is a lot going on. Central banks from Europe to Asia, have been pumping trillions of dollars into their financial institutions in a coordinated and unprecedented attempt to jump-start recessionary economies on a worldwide scale. In other words, governments both here and abroad are injecting plenty of liquidity into the world's vast, interconnected economic bloodstream that will be a huge factor in the global economy's recovery and our own.
Obama's prediction of "years, not months" not withstanding, the history of recent recessions shows they do not last long. The 1974-1975 recession lasted 16 months; in 1980, it lasted six months; the 1981-1982 downturn ran for 16 months; the 1990-1991 decline ended in eight months, as did the 2001 recession.
So don't believe the gloom-and-doomers who are always selling our country short and who are always wrong over the long run. We've got a bumpy road ahead of us in the next few months, but we're going to pull out of this downturn a lot sooner than the pessimists think.