| Finance

Chicago Tribune (MCT) - The job. The house. The investments.

The foundations of America's financial well-being gave way in 2008, and they may have even further to fall in 2009. The promise of an eventual economic recovery keeps receding deeper into the coming year as the bad news mounts relentlessly.

Don't expect much good to come in 2009, warned Marvin Zonis, a political economist at the University of Chicago Booth School of Business. "The only thing going up besides unemployment will be the sale of anti-anxiety and anti-depressant medication."

With everything Americans counted on for their financial security under pressure, major life decisions will be put on hold, Zonis predicted. That means retirements will be postponed, career moves derailed, families not started and medical advice ignored.

Wages for men in their 30s stand well below comparable levels in the 1970s, marking "the end of the American dream," Zonis said.

Expecting each successive generation to fare better than the last will be too much to hope for in 2009. Instead, Americans will be longing for an end to the corporate failures and market shocks that made 2008 a year of historic commercial devastation.

Stability will be elusive, however. "We've been lulled into thinking major recessions don't happen," said Robert Chirinko, finance professor at the University of Illinois at Chicago. "If anyone is still thinking this is a mild recession, they're going to be sadly mistaken."

Optimism may be in short supply as 2009 dawns, but realism is in.

As family-owned Showalter Roofing enters its 30th year, President Dale Showalter is expanding, fitting out a new sheet-metal shop and adding a crew for it despite the housing bust. "We've been hiring instead of laying off," he said.

The Naperville, Ill.-based roofer launched his expansion this fall with eyes wide open, figuring opportunity comes in the midst of adversity. "You've got to have a roof," the 58-year-old said.

He vows to "take whatever steps we need to help make it through the hard economic times," he said. "But we will also look at more opportunities that are out there for us to capitalize on."

Showalter is up against a devastated housing market _ bad mortgage loans the catalyst for this year's blowout in the financial-services industry.

Home prices have fallen nationwide for the first time since the Great Depression _ by about 10 percent as of early December, said Erik Hurst, also a Chicago Booth professor.

The bad news: Housing prices will fall another 15 percent to 20 percent in the next couple of years, he predicts. "We've got a long way to go."

His study of market data stretching back decades gives him 100 percent confidence in his prediction, he said. "A big increase in price movements is followed by big declines. Take it to the bank."

Falling home prices inevitably discourage consumer spending and reduce the incentive to build new homes, but the biggest impact will be felt by lenders, whose balance sheets will suffer, Hurst said. That will result in "less lending to solid applicants" and, consequently, he said, "a drag on the U.S. economy."

That in turn worsens unemployment, and in keeping with the bleak outlook for the year, the job numbers look rough. Through the end of 2008, employers will have shed roughly 2.26 million jobs, according to Paul Kasriel, chief economist at Northern Trust in Chicago. That's about 188,000 a month.

Between now and December 2009, losses will average 250,000 a month, with the pace slowing as the year rolls on. "It's going to be ugly at least through the spring and early summer of 2009," Kasriel said. "You're seeing layoff notices coming day after day."

Showalter knows the outlook and he has a Plan B if all else fails: His office staff will leave their desk jobs to join his roofing crews. He's hoping it won't come to that, but he knows he's not in this all by himself. The whole world is in it too.

As Showalter put it: "We've never heard the words 'global economy' so much."

___

© 2008, Chicago Tribune.