I will start this blog by simply defining a recession and then seeing if that is where we are in the economy as we speak. According to good old Webster, a recession is defined as a period of reduced economic activity. Let’s look into this definition and see what that really means. Unemployment is high at around 5 percent and that means people are going to have less money. When people don’t have money to spend, then there is less market activity. That is a really simplified version of a part of what causes a recession. You see, that is why Bernanke cut rates and the talk about a higher tax refunds is circulating. Is it to late though? When energy, oil, and health care are going up, and job security is going down, will this not also be a huge factor in people spending money? Absolutely it will. The value of the dollar has fallen more and we are really looking like a weak economy. I am constantly reading about Bernanke and all the other economists predicting a 50/50 chance of a recession in 2008. Some argue it’s already here. What do you think? How long will it last? In definitions of recession, it usually states that it takes 6-12 months if not more to get through. What will this mean for you?I will post a blog soon about how people can make money in a recession. It has been done!TRM Talkrealmoney.com
I heard on the radio this morning that in the case of a recession, it’s not even possible to know until months after it started! I guess that would be true when the technical definition requires at least two consecutive quarters of negative growth in the GDP. But I also heard that according to a CNN poll, 57% of Americans thought we were already in a recession a month ago.
I don’t know where we are technically, but I’m in agreement with the 57%. And who cares whether it is technical or not when we are experiencing the effects regardless? I spent the greater portion of summer 2007 looking for a job and it was not easy. The jobs I did find offered compensation not just far less than desirable, but far less than I could afford to live on.
I did find work last August with an industrial company; while I am fairly secure in my office staff position, I have seen numerous people laid off since my start. Why? Not enough work. The phones are slow, and when they do ring, its sometimes one of our existing customers to say “we are behind on our payments because other people aren’t paying us.”
I’m not sure what this all means to me at this point; what if anything can I do? At the very least it does make me uneasy – and is causing me to pay closer attention to something I never had to before.
Thank you for sharing Jeannine.
I think that if we were to look at the growth in the last two quarters, we would see substantial negative growth. With CitiGroup and Merrill Lynch both reporting 10 billion dollars of loss, I would say that we might already be in what we fear. We might just be at a certain level of a recession. Some states get hit harder than others. I think though, that we are all starting to feel the ripples as a nation. The stock market has not had such a bad start to a first quarter in 27 years. Unemployment is still moving up and inflation is as well. Food, Gas, and Oil is way too high. That is what affects us immediately in my opinion. Talk of the stimulus plan and rate cuts brings some optimism. It all depends on how fast the plan can be implemented.
TRM talkrealmoney.com