Saturday, August 2, 2008

The "R" Word

Recession. Are we in one already? Is one looming? What is a "Recession" anyway? All good questions and the answers depend on who you ask.

By definition, the economy would need at least 3 consecutive quarters of negative growth to officially be recessed. We haven't had even one such quarter. We haven't even had a quarter of zero growth. In fact, the last quarter was up to 1.99%. While that is not flying, it is also not recession.

But we do have an economic slow down and we have some segments of the market that are in recession, namely the housing and automobile industries. Both are in the tank.

The combination of a weak dollar and high oil prices, have created an inflationary cyclone that are sucking in parts of the economy and millions of individuals and families. And don't forget that the weak housing and automobile sectors have affected unemployment. While not at overly high rates, the unemployment rate has risen over the last year.

Higher oil prices have raised the prices many things, not just gasoline. That makes it tougher on people to spend outside basic necessities. In our case, our gasoline budget has doubled in the last year. And we now only have one person working. Families with two people working, plus children in sports, school and church activities must be paying small fortunes in gasoline. They are also hit hard at the grocery store. It's hitting hard.

What it has really created is a credit crisis and a priority crisis. People can't borrow like they did just a couple of years ago. Industries that rely on credit are hit hardest when that happens. Who can buy a big new house when all their money is going into fueling their cars and kids? Who can afford a new car payment much less the gasoline for a big SUV or Pickup?

There's concern and there's confusion. But don't despair. Let not your hearts be troubled. There is hope. It's called "cash". When we learn to manage our money, live on less than we earn develop a lifestyle of "delayed gratification", we can prosper even in the worst of economic times.

People are starting to get it. I keep saying that, but it's true. We're receiving more requests than ever for our free Basic Spending Plan. IOU NO MORE is selling well. My email is hopping. Yes, the heart wrenching stories hurt to ready. But the hope that is growing from the grassroots makes me very happy.