Do you believe the US is in a recession?

[another guy]

Originally Posted by Briolat21

(...)

Unless people really were using their houses as ATMs (which I just can't the average person doing) - why is it only suddenly they realized that they were just treading water?

That to me does seem to point to the influence of the media. Last year most people were making the same money, and things only cost a LITTLE bit less - so maybe at the end of the month, after all necessary expenses, people had $75 left over. For all intents and purposes - they are living paycheck to paycheck, but psychologically - their house is appreciating and they feel okay.

This year, even though they have no intention of moving or selling their house, they have $25 left at the end of each month - still living paycheck to paycheck - but now suddenly they are panicking and convinced the economic world is ending.

that to me is a little strange. Unless you are losing your house due to an ARM resetting, or you have lost your job -- life hasn't changed all that much for the rest of us. So why the panic?

I think that's the point, though. A lot of people were deluded into thinking that their home is the goose that lays the golden eggs--they could always refinance to extract more money, and whenever they would decide to sell, they could count on a hefty profit.

Also keep in mind that many refinanced using option ARM's, thinking that they could always refi before the rate reset. Well, the chickens have come home to roost.

Even if they did not refi, their net worth increased significantly because of the housing boom, making people feel more secure financially. Now, they see inflation going up and their net worth going down, with wages stagnant. Before, inflation wasn't quite as bad, and wages were stagnant, but net worth, thanks to the housing boom, was growing leaps and bounds.

[sgresident]

i think that the media plays a big role in the perceptions that the public has. I think if they labeled things with a more positive spin, the public would have a more positive outlook. when you only hear doom and gloom, you start to live that way. I think that the whole credit card thing has made it easy to have things that people can't really afford. People need to be smarter than that. buying a tv for a couple thousand and paying 20 bucks a month is not a deal! also, the ease that people could get home equity loans and use them to take vacations..that's crazy. if you can't afford to go to disney, don't take out a loan! go somewhere that you can afford. It all goes back to living beyond your means.