FICO analysts are talking a “generational” timeline for home prices to recover – that’s the kind of talk Americans haven’t heard since the Great Depression.
“Housing has been an enormous drag on the economy for over three years as U.S. households lost trillions of dollars in equity,” Dr. Andrew Jennings, chief analytics officer at FICO, noted in a statement. “While the housing sector will almost certainly gain strength during the next nine years, many bankers clearly believe prices will remain depressed for half a generation. This puts the devastation of the housing crash into perspective.”
Beyond housing, The FICO survey looks pretty grim across the board. Bank managers say that credit card accounts, student loans, and auto loans should all see a rise in delinquent borrowers through the first quarter of 2012. The survey says that consumers will continue cutting back on credit card usage for at least five more years, and that could drag down the U.S. economy further.
Furthermore, only 34% of bank professionals expect credit to small businesses – widely considered a harbinger of economic growth – to increase through the same time period.
Comparisons to Japan’s recent “lost decade” have started bubbling up in the financial media over the past month or so. With a full-blown housing recovery at least nine years off, those comparisons are starting to look more prescient every day.