Skip to main content

Looking Forward to 2009

So it is a new year and with each new year there is a new opportunity for change and improvement. I'm actually guilty of being quite optimistic. This past year, the economy was the main story, hands down. But I'd like to say that I think that things will look better in 2009. And even more than many people, I think that we're going to be quite pleased by about 6 months through 2009, sometime in the summer.

I need to be very clear that I have nothing other than a hope and a prediction, no real solid evidence. It's just my feeling. The amount of wealth destruction that has happened as the global economy has deleveraged is staggering. So, I think that as we begin to add leverage again, we're going to realize that it was not quite as bad as we thought it was.

I'm very specific in why I feel this way. I think that most people want things to go well. That is, I think there's more optimists than pessimists overall. And I think that despite the increased unemployment (nearly 8% last time I checked), that still means that 92% of people are employed. And those 90+% are the people who matter when it comes to getting this economy back on track.

The mentality of many people right now, myself included, is that there is too much risk. Risk exists in whole areas that felt rather safe 6-12 months ago, even if they weren't. Health seemed safer. Jobs seemed safer. The ability to get another job felt more certain. And the price of energy seemed more stable along with prices. In some way, the decrease in gasoline prices has helped, but it has contributed to my increased uncertainty. If it can go down so rapidly, why can't it increase in just the same manner? And when might that happen?

So how to react? Save. Then stop, rethink. Wait. Save more. Save even more. Look around, and save more. That is what people are doing. Reconnecting with family, friends, saving more, consuming less, and refocusing on what they think is important in life -- not stuff. However, eventually, things will get somewhat easier again and those people (myself included) will start to spend again. And once that happens, I think that we'll see an increase in consumer confidence. That is what I think will improve.

Besides that, I think that the changes that a new presidency will bring will also help. More than specifics, just the mentality that things are different will help. Again, perhaps it is just blind optimism, but I think that we're near the bottom of consumer confidence. Here is some interesting info from gallup. And if confidence goes up and people spend more, the economy (including job and stock and housing market) will recover over time. I'm not looking for instant gratification...just an end for this long downtrend.

Comments

Popular posts from this blog

Blogging WealthTrack: Christine Benz (Retire Early? Or not?)

 This morning I've watched an interesting video on Consuelo Mack: WealthTrack. Here, Consuelo's guest, a longtime contributor, Christine Benz, a personal finance expert from Morningstar joined Consuelo for a discussion on issues related to retirement, in particular in the current market environments. This conversation is even more interesting against the backdrop of The Great Resignation. I found Christine's advice to be particularly interesting on a couple of fronts. Her advice in dealing with talking about retirement in general, in particular for people who are in the process of thinking about retiring early gave me pause. She is considering the traditional advice of a 4 percent withdrawal rate to be dangerous and indeed, actually concerning. According to the recent research she cites, a 3% withdrawal rate is a better option. Even more than the four percent rule, I think that her comments on annuities are particularly interesting. While annuities have been given a bad nam

More Money Into Ibonds

 At this point, it seems like a well-known strategy for handling inflation: ibonds. While there was not much press about this, it is in fact something that I did late last year in order to capitalize on the fact that this interest rate was bound for up to 10000 dollars as part of my allotment for 2021. Then now that we're in the new year, I have moved another 10000 into the account. All of this can be done easily at http://treasurydirect.gov if you're willing to give up the fact that the money is locked up, that the interest rates to be paid will be somewhat lower than you could earn in the market, and you're able to ensure that you're not needing the money for the near future.  For me personally, I find that this is a great way to lock up about 25% of my emergency (safe) money instead of putting it into a High Yield Savings account. This interest rate changes every six months, but even if it is much lower, I think that we're going to be in much better shape than if

Credit Report Review

So, one of the things that I've started doing is trying to pull my credit reports at regular 4 month intervals so that I get a free one frequently to make sure that things are progressing as I'd like them to and also as a safeguard against identity theft. Of course, the part that I don't like is that these reports don't include a fico score - the key number when it comes to determining if you are going to be extended credit and at what interest rate. This time, I got the report from Equifax - I went to the end of the process and for 8 dollars more I could get my credit score. And the Equifax gave me a credit score of 742. This of course is not even close to the perfect score of 850 when it comes to fico score nirvana, but 742 is still a respectable fico score. Things to improve are basically lowering my balances on my credit cards and loans, which I already have a plan for. And also I noticed that the amount that I paid off on one of my loans is actually still being rep