End Of The Credit Crunch?

Facing the distribution of those much needed rebate checks, US Treasury Secretary Henry Paulson is optimistic that the end of the credit crunch is near. Paulson admits that the high price of gasoline will prove problematic when it comes to reviving the struggling economy he does sound hopeful that the economy will receive the boost that the stimulus package was intended for.

“We’re closer to the end…” Paulson was quoted as saying in regards to the crunch that many say was caused by the Sub Prime Mortgage crisis whose effects rippled to other parts of the US economy and world wide.

With a barrel of coil costing $123 dollars last week and a job market that continues to see lay offs the economy is far from stabilizing. Paulson foresees the economy turning around unlike his counterparts who are warning of a recession. Recession has been a real fear for many as foreclosures continue and inflation has settled in. Many consumers are already saying the US is in a recession even though the economy has yet to reach the official definition of one. Consumers are still being affected by the credit crunch the most and are looking forward to the stimulus checks. Many of those checks have already been deposited into accounts with the rest set to go out through the remainder of May and into June.

President Bush has stated that the stimulus package will bolster the US markets while opponents believe that the checks will be going to the gas pumps. While Paulson can see that this is possible he still believes that the package will help.

The fallout of the Sub Prime Mortgage companies and the collapse of Bear Stearns have not helped consumer optimism which is still incredibly low. With the decrease in the availability of loans consumers need as much help as they can receive but are expected to spend the stimulus checks instead of saving that money. Many consumers have stated that they plan to save the money or spend it on gas and essentials like food.

Paulson admits that the credit crunch is not yet over and expects to see more “bumps in the road” yet he remains optimistic that the economy will improve by the year’s end.

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