There are three huge issues that are going to continue to cause a lot of chaos and just plain old economic suffering over the next couple years:
1) The Housing Market
We're nowhere close to done with this one. Although the numbers came in last month saying that foreclosures were down, the reality is repossession is UP -- that is the banks are actually taking title on more houses. The fear is that they're clearing out the backlog before they go back to foreclose some more.
Now, there is a good side to this which is that the people under the crushing debt of huge house payments don't have to make those payments anymore, but because the housing market keeps being depressed by too many cheap, bank foreclosures, no one is seeing equity come back which means A) no retirement and B) no slush funds on home equity lines.
The Gulf spill is bad and even if I'm wrong that the gulf is going to die from low oxygen levels and the fishing and tourism trades will never recover, the short term is that fishing and tourism are practically shut down, hitting an already economically depressed region with another blow.
Regardless of what happens in the Gulf, it's a reminder that we're doing risky stuff to keep oil flowing, and we're on the brink of oil getting much more expensive. All 33 deep sea wells are shut down in the Gulf right now, and it's not likely there will be a lot more construction going on in the near future.
Our entire economy is driven by oil, from food to computers, to all the cheap stuff we buy at IKEA -- as oil continues to climb the basic cost of getting grapes from Chile or fertilizing corn in Nebraska will continue to go up.
While it looks like the Senate is going to extend unemployment again, it's getting harder to pass and, honestly, harder to justify. Eventually a whole lot of people are going to find themselves without that federal assistance, and already a lot have lost their COBRA medical extensions -- meaning the cost of insurance is going up for these people as their income disappears.
One big problem is that a lot of the jobs that went away are never coming back. With automation, over seas labor, and just plain changes in the way businesses work, a lot of jobs just don't exist anymore. How the people who have been on unemployment looking for that finance job or mid-level management position are going to adapt to a different job market is something we don't know yet.
Now, I'm not saying it's all doom and gloom, but we can't pretend everything is okay.
Part of this is the cost of globalization, which means the world, in general, has more people living the American Dream; they just happen to be in India, China, South America or Eastern Europe... There is lots of work out there if only because the country is in crisis. The trick is to be flexible and adapt to rapidly changing needs and understand that things really are different, and as painful as it's going to be, roller coasters can be fun.