Rock River Valley leaves worst of slump behind
Saturday, April 09, 2011
By Alex Gary
Posted Apr 09, 2011 @ 04:56 PM
ROCKFORD — Even though March 2010 wasn’t a part of the Great Recession — which officially ended in June 2009 — it may have been the bottom of the economic well for the Rock River Valley.
The jobless rate was at 17.2 percent, down from the 27-year high of 19 percent in January; the number of local people filing for bankruptcy protection soared to a five-year high; and the number of new foreclosure cases filed hit an all-time high.
A year later, the economic recovery continues to build steam, albeit slowly, and bankruptcy cases in March 2011 were down 22.2 percent from last year. Foreclosure filings were down 35.1 percent.
Fred Rezazadeh, a Rockford College economics professor, said both bankruptcies and foreclosures are lagging indicators — meaning they improve well after other indicators start showing positive signs — but the fact that fewer people are losing homes or becoming insolvent is feeding the recovery.
"You see it in improved retail sales, and normally you would see it in construction — that’s not happening this time around,” he said. Real estate sales continue to show little signs of recovery, and homebuilders have little incentive to add more homes to the market.
"Orders for capital goods is a good leading indicator,” he added. "When companies need to expand or buy new machinery, they increase their capital goods orders. That’s been improving consistently, and it’s because people have more money to spend.”
Rezazadeh cautioned that the decline in foreclosure filings may be temporary.
"The twist is that issue at the end of (2010) with the automatic document signing,” he said of the so-called robosigners who caused several major banks to halt foreclosures while they reviewed their policies. "Some of the banks held back, so it’s not clear yet what level foreclosure activity is really at.”
This story appeared at http://www.rrstar.com/top_stories/x1700910889/Rock-River-Valley-leaves-worst-of-slump-behind on April 9, 2011.