Slow Recovering Economy Sends People to Rely on Payday Loans

Thursday, August 22nd, 2013 By

With a recessive economy to deal with, many people are looking to payday loans as a way to manage their finances. According to a new report, President Obama’s new budget fails to address the country’s biggest money problems. There is a huge need for large sums of money to fix the biggest issues, which are health care, global warming, and tax code. There are many overwhelming roadblocks, both financial and political.

Economy slow to turnaround

The White House’s efforts to cut back notably ignore the Social Security and Medicare issues. Estimates say that $17 billion could be saved by government efforts, but this is only a small chunk of what is needed. It may be that the only answer to truly recovering is to build a strong economy and increase government revenues. But how does the president make this happen? As the AP’s Jim Kuhnhenn wrote, “Pushing ambitious agenda during a tepid economic rebound will require money and presidential muscle that eve a popular president might find in short supply.”

The recent past

It’s been several months since the president introduced his 2010 budget. In those two months the recession has proven to be worse than anticipated. Budget writers hoped for a GDP that shrank to 1.2% by the end of this year, however it already shrank by 6.1% in the first quarter. Moreover, economists are predicting a greater, though slighter, shrinking to occur before an upturn.

In the same vein, Obama’s budget predicted unemployment to be at 8.1% by next year. However, it already has reached 8.5% and is expected to climb a bit higher before year’s end. The president’s agenda will be affected by these new numbers that are surpassing his forecasts. In terms of making a health care policy that is acceptable, this does not bode well. “It doesn’t improve chances,” said Senator Ben Nelson of Nebraska. “It might dampen some enthusiasm about trying to find a health care solution that costs money.”

What this means to the everyday consumer

With huge policies still up in the air, the economy is sure to see continued shifting, and not necessarily in a positive way. Consumers are bracing for the stress by shoring up their savings, looking to payday loans, and using family loan options. It’s a difficult time as people wait out the recession, hoping new policies will strengthen the economy and end the recession.

Glimmer of hope

Despite the current numbers, America is hopeful. Almost all analysts agree that the turnaround is coming; maybe not soon, but it is coming. Ben Bernanke, Chairman of the Federal Reserve, cited growth to begin later this year, predicting home sales, spending and lending all increase steadily. He does warn that activity will be lower than the norm, but the pickup could help pull the country out of the recession. It is this glimmer of hope that Obama’s cabinet is focusing on to encourage the American people. They are hoping that this hope will bring about a continued support for the president’s policies and proposals.

Consumers manage their ways through the recession

In the end, consumers are left to focus on their own finances and wait until the economy turns around. A payday loan, extreme budgets and downsizing are all tactics people are using to manage their ways through the recession. They are hopeful, however, and looking to policymakers to help orchestrate a way out of the recession.

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