Challenging years until the next elections | Bangkok Post: business

ECO CAFE

Life is full of challenges and we do not know what lies ahead. The next four years may be a long time for a lot of people, and a lot of things could change. But four years may not be long for the re-elected President Barack Obama, given the fragile recovery of the US economy.

We all remember that four years ago Mr Obama was a figure of hope and inspiration. The American economy was in a downward spiral when he took office. The US financial system was in deep trouble, and the country had a lot fewer jobs than it previously had. Households were debt-ridden as the value of their homes fell substantially following the bursting of the housing bubble. With deteriorating household balance sheets, consumers stopped spending and businesses decided to stop investing. Banks and carmakers were in deep trouble from heavy debts and losses.

Although the financial market chaos was resolved quickly thanks to a large amount of liquidity injected by the Federal Reserve and bank bailouts, economic recovery did not come fast enough. The condition of the US housing sector, the usual key driver of a quick recovery, remains weak four years on, while households are trying to pay down their debts instead of spending, depressing demand further.