30 December 2009

Can you spell R-E-C-O-V-E-R-Y?

Two years ago today I wrote a blog entry titled Can You Spell R-e-c-e-s-s-i-o-n? with my thoughts on the economy in 2008. A year later, I wrote an entry titled Can You Spell D-e-p-r-e-s-s-i-o-n? with my thoughts for 2009.

This year, I offer my thoughts for 2010 -- and the recovery ahead. Because, let's face it: even though things COULD be worse, they probably won't get worse than they have been this year.

Let's start with some basic indicators, like unemployment: This year saw a national high unemployment of 10.2%. That has dropped a little, but 10% is still pretty impressive. It's even worse if you live in California, where the unemployment rate hit a high of 12.5%, Nevada (13%) or Michigan (15.1%). It is worse for teens, whose unemployment hit a record high of 25.5%

Another indicator is the record high price of gold at $1,217. Everyone knows the price of gold goes up as troubles worsen. Then there are the rates of foreclosures on houses. While foreclosure rates have been decreasing, and housing prices have leveled off in some areas and even started to rise in others, they are still high.

So, yeh, things are bad, but I am starting to think prosperity is right around the corner.

Why? Well, for one thing we have people in political office who clearly have an intent to actually attempt to make things better -- for everyone, not just the rich or well connected. For another, the country will keep going, and to go it needs products and services, and to get those it needs workers. So while many business are cautious about increasing staffing levels, they will have to increase staffing and productivity to deal with shoppers who have been slow to spend, but who need to start replacing worn out products -- and who might just be itching for a little something special, like a trip, or new car.

The economy could go either way -- and if we are not careful, we will lose all the gains we have made in the past two years. The U.S. economy specifically and the world economy in general is strengthened by stability in overseas markets -- especially Europe and Asia which both seem on firmer footing.

So, while I still think it best to not change your employment or family situation for at least the next six months, now might be a good time to loosen the belt a little, allow for a little more discretionary spending where practical, but still keep saving some money and paying off those credit bills. Try to live a little more frugally, paying cash where practical, and not spending beyond your means.

If we can all hold out another six months, I think we will start seeing the turnaround we have been hoping for.

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