Dublin is looking pretty dreary these days. Although most of the recent European monetary news is centered on the financial fall of Greece, almost every country in the European Union is feeling the pinch. According to Eurostat, the Standardized Unemployment Rate in Ireland for the First Quarter of 2010 was an unprecedented 13.2%, exceeded only by Latvia, Spain, and Slovakia. In contrast, the U.S. Bureau of Labor Statistics puts the U.S. unemployment rate thus far for 2010 at 9.7%.

When I first moved to Dublin in January 2008, I was amazed at the sophistication and high standard of living. My apartment was brand new. We were one of the first to move into the beautifully-landscaped and meticulously-planned complex. There were new buildings popping up on every corner. The bustle of Grafton Street was like a dream, flanked on either side by high end department stores like Brown Thomas and Weirs Jewelers and intermingled with historic sites and the writing haunts of people like Joyce and Yeats.

Ireland’s 12.5% corporate tax rate and strong political relationship with the U.S. brought companies like Dell and Microsoft running to plant their flags on Irish soil. (There are rumors that Bill Gates and Michael Dell had a Lightsaber battle over location.)

Not only is it cheaper than running a business in the UK, but it is the only other English-speaking country standing between the U.S. and the rest of Western Europe. It’s a great stop on the way to and from European mainland destinations from the U.S. Eastern Seaboard, and a convenient home base for companies with international needs.

It didn’t take long, however, before the building simply stopped. Unfinished apartments, abandoned buildings with only three outer walls and a serious loss of jobs were all anyone spoke of. The money simply dried up. Companies were moving. Dell moved its manufacturing plant from Limerick, Ireland to Poland. Waterford Wedgwood had a financial collapse. There was a banking crisis. Property values plummeted and no one could afford their mortgage. People were getting laid off and there was simply no more work.

As it turns out, I had arrived for the last breath of a mythical creature—the Celtic Tiger—a term describing Ireland’s boom economy between 1995 and 2007.

But in 2008, the spirit of the Celtic Tiger was in the wind, soaring its way down the streets of Dublin, through the arched entrance of Trinity College, along the piers of Dún Laoghaire, and out to the Irish Sea.

Here is the bottom line: the Celtic Tiger is Ireland’s Bigfoot. Years from now I’ll be sitting in my local pub, listening to some old man tell the story of how he saw the Celtic Tiger in all his glory, his coat shiny with health from living off the fat of the land. And I will want to believe him. I really will. But deep down I’ll know this man is lying.

The Celtic Tiger never really existed at all.

Check back later this week for the first article in our series on managing your finances abroad.

If you’re considering whether to invest in gold, it’s important to understand the close relationship between the value of gold and the value of the dollar.

A Brief History of Gold and the Dollar

To understand how and why gold has had such a historical run-up, a little history lesson on the relationship between gold and the dollar is helpful.

The relationship between the dollar and gold is tied to the concept of tangible assets vs. financial assets. To put it simply, gold has real value, while the dollar is a representation of real value.

In 1944, the Bretton Woods Agreement launched the first system of convertible currencies and fixed exchange rates, requiring participating countries to maintain the value of their currency within a narrow margin against the U.S. dollar, which was fixed at a rate of $35 per gold ounce.

However, in the 1950s and 1960s, the increasing supply of U.S. dollars along with capital outflows aimed at Europe’s postwar recovery put downward pressure on the dollar.

Eventually, a series of dollar devaluations in the early 1970s ended the Bretton Woods system, allowing the dollar to be freely traded and freely sold, beginning the long drawn-out period of the falling dollar.

An Inverse Relationship

Perhaps one of the most well-known relationships in currency markets is the inverse relationship between the U.S. dollar and the value of gold. This relation occurs because gold is typically used as a hedge against inflation through its intrinsic metal value. As the dollar’s exchange value decreases, it takes more dollars to buy gold, increasing the value of gold.

While the dollar’s value is at risk of fluctuation through shifts in monetary policy, gold’s value is largely determined by supply and demand, without interference from shifts in monetary and corporate policies.

Between January 1999 and May 2008, the correlation between the two has been a staggering (-0.84), indicating a very close negative correlation.

As with any close relationship between two assets, the gold-dollar inverse relationship has not been without periods of temporary decoupling. The most significant exception to this rule occurred between April and December 2005 when the correlation between gold and the dollar was as high as 0.66. During this period, the U.S. raised interest rates while China revalued its currency, giving them an opportunity to snatch up gold and other commodities.

Monetary Policy Effects on Gold

The dollar’s value is largely determined by monetary policy enacted by the Federal Reserve Bank. Over the last few decades, the Fed has used the federal funds rate as a tool to control inflation and stimulate the economy and in doing so, has also impacted the price of gold.

In plain English, when the central bank lowers the federal funds rate, banks can lend to other banks at lower interest rates which, in turn, makes lower interest rates available to borrowers. And when rates are lower, borrowers have a greater incentive to take out loans (to start businesses, for example). This type of policy increases the supply of money in the system.

Conversely, if the central bank becomes concerned that there is too much money flowing around, it will raise interest rates to pump money back out of the system, curbing the risk of inflation.

As you can imagine, as the central bank lower interest rates, more money is printed. This lowers the value of the dollar and, consequently, raises the value of gold. Likewise, a rate increase strengthens the dollar and devalues gold.

Gold’s Current Rally

Gold is in the midst of a great bull market because interest rates have been at historic lows for such a long period of time.

Towards the end of 2008, small businesses sputtered and the economy stumbled. In response, the Federal Reserve cut rates to stimulate borrowing and spending—an attempt to cushion the blow of a souring economy. These low rates have been virtually unchanged since November 2008. In response, gold has enjoyed a run throughout 2009 as investors worried about inflation.

Should You Invest in Gold Now?

This is a tough call. Although inflation concerns are legitimate, gold has been making new highs during the last couple months leading many to wonder if it might be running out of steam. My gut feeling tells me that all the media attention gold has been getting as a safe haven for inflation has put gold into “bubble” territory.

Although inflation is still a concern, Americans are spending a lot less and a stable economic recovery is a much bigger concern at this point than rising inflation. Once the economy shows any signs of surviving on its own without government aid, the central bank will most likely raise rates quickly, to subdue any risk of inflation.

I would advise against investing in gold for now, but if you are interested in gold, the best and easiest way to gain exposure is through ETFs. Make sure you do your research before making an investment!

• Read More: How to Invest in Gold

What about you? Are you bullish on gold? Would you consider buying gold despite its recent run up?

Although a positive GDP report bolsters confidence about the country’s economy, it is important to look beneath the surface to assure that such optimism is supported by reality. The following is a recent example.

Quarterly GDP numbers are always revised three times. The original estimate for third-quarter growth in the U.S. marked the economy expanding at a 3.5 percent annual pace. A month ago, economists dropped the number to 2.8 percent. And most recently, the Commerce Department revised the third quarter GDP figure to 2.2 percent.

These GDP numbers mark the biggest positive growth in a quarter since 2007. On paper, the economy seems to have finally stabilized from the free-fall of the deep recession. Looking closer, however, I’m less optimistic of a fast recovery for a two big reasons.

Growth is Too Government-Driven

The first red flag is the fact that a big portion of the economic growth stems from government stimulus spending. If we were to subtract this government spending, the economy would not show a recovery.

The big sectors that contributed to GDP growth were automobiles (1.45 percent), residential investments (0.43 percent) and government spending (0.55 percent), for a total of 2.43 percent.

What’s wrong with this picture?

Automobile sales were largely boosted by the government’s cash-for-clunkers program, which provided a temporary backstop to Detroit’s woes, albeit inefficiently.

Cash-for-clunkers was a success in the short-term, as consumers rushed to purchase new cars in time for the rebate. However, it remains to be seen whether or not this program can help sustain automobile sales and stabilize the U.S. auto industry. At least for the few months following cash-for-clunkers, we can expect a natural decline in new-vehicle sales when compared to August levels.

Likewise, the first-time homebuyer tax credit temporarily boosted home sales throughout the country. But the stabilization of the housing market—a critical component to an economic rebound—is likely several months away from reaching sustained growth. Economists expect home sales to remain in a slump next year after the housing credit expires in April.

With the government planning additional stimulus plans such as a cash-for-appliances program followed by a cash-for-caulkers, will the benefits outweigh the costs to taxpayers in the long-term? We’ll have to wait and see.

Too Much Private Consumption

GDP is defined, using expenditures, as:

Private Consumption + Gross Investment + Government Spending + (Exports – Imports)

Another reason I am skeptical that positive GDP numbers do not indicate a quick rebound will occur is the high level of consumption in the U.S. that is included in those GDP figures. (Once again, the government stimulus programs contributed to high levels of private consumption).

The weight of each component contributing to GDP varies from nation to nation. A glaring example is the large role private consumption in the GDP of the United States compared to the GPD of other nations. For example, domestic consumption makes up just over a third of China’s economy compared to a whopping two-thirds in the U.S.

Consumption fuels America’s economic growth while other economies, including China’s, are expanding because of increasing exports—a much better foundation for long-term economic growth.

An increased effort to rebalance these figures has been the big theme in talks among the top twenty developed nations (G-20) in the world. In other words, U.S. consumers need to save more while Asian consumers should spend more.

Thus, even though China grew at an astonishing 9.6 percent in 2008 (recently revised from nine percent), China could expand even faster if its population consumed more.

The United States has been able to prop up a fraught economy with government investments and stimulus programs, but only time will tell if these actions will create a sustainable long-term recovery or are a window dressing that’s temporarily masking our ongoing economic weakness.

What do you think? Are you optimistic about the economy in 2010? Do you think the economy can sustain itself without aid from the government?

But the truth is: recessions are part of a normal economic cycle in capitalist societies. In other words, recessions are necessary evils.

On the bright side, there are three reasons I believe recessions are actually good for the economy:

1. People’s attitudes change (for the better)
2. We see growth and innovation in underdeveloped sectors and shrinking of overcrowded, bloated sectors
3. We have the opportunity for self-evaluation

Attitude Change

Recessions naturally create shifts in our thinking and behaviors. On average, over the course of a recession, we go from being irresponsible, irrational spenders to frugal, prudent savants who make much better financial decisions.

Even ordinarily financially-savvy consumers begin to make even more frugal decisions during a recession. We abstain from making unnecessary purchases, we put in that extra effort to find the same item for a better price elsewhere, or we learn to forgo paying more for expensive, brand-name good. According to a December 2009 McKinsey & Company report, “…in any given category, an average of 18 percent of consumer-packaged-goods consumers bought lower-priced brands in the past two years.”

Such attitude shifts can have lasting impact on consumers.

For example, spend some time with Americans who lived through the Great Depression and World War II, and you will quickly realize how deeply their worldview (and consumption decisions) have been affected by the hardships they endured decades ago. Many who learned resourcefulness and frugality during hard times never unlearn those behaviors.

On a personal level, if today’s recession hurts even a little bit, your subconscious starts telling you work harder and spend more conservatively. That recession mindset might tell you to pass on that cashmere crewneck at J. Crew or to cook yourself a healthy dinner at home instead of eating a fatty Chipotle burrito. And we all know that saving money here and there certainly won’t hurt you in the long run.

Now, imagine what happens when hundreds of millions of people collectively experience a deep recession. These subtle attitude changes on an individual level combine to create a much wiser, financially-responsible populace. Now we’re talking.

Sector Contraction and Expansion

The academic definition of a recession is a period when the excess “fat” is removed from the economy, paving the way for expansion. Until this purging is complete, the economy will be less efficient and will continue to drag along.

In theory, recessions punish both companies that have made bad decisions (by putting them out of business) and incompetent workers who put their employers at risk (by putting them out of work).

In the process, laid-off employees intuitively find other work at firms in underdeveloped sectors that are in need of more labor. Thus, work is distributed more efficiently elsewhere in the economy where there is more demand for labor. Subsequently, the weakest players in bloated sectors do not survive, and the strongest businesses in those sectors become leaner and more efficient.

The recent collapse of the financial services industry is a perfect example. There were too many pigeons fighting for the last bread crumb, which led to firms taking excessive risks and engaging in dubious practices. Something had to give, and it did; first Lehman Brothers collapsed, and soon the entire industry began a quick and forceful contraction.

This cycle of contraction and expansion is not always perfect. Sometimes, contraction within one sector can be so violent, it doesn’t create a small ripple in the economy; it starts an avalanche. In such a case, if nobody stops the avalanche, businesses in every industry are at risk.

Most recessions, however, do us a service by correcting and rebalancing the economy, which helps young, promising industries develop. In fact, economic downturns (including the current one) are often tied to increases in entrepreneurship and small start-up firms. Thus, recessions have a way of sparking innovation as well.

Opportunity for Self-Evaluation

Finally, recessions allow us to step back and reevaluate ourselves. Imagine you started a career in a once-trendy industry for the glamour and big paycheck, but in a recession the industry collapsed and left you jobless. What would you do?

In situations like this, recessions may allow some people to pursue their true passions, which may make their work more enjoyable, which may lead to higher productivity, which may lead to a better lifestyle, and so on. Too many of us get stuck at jobs that pay the bills but don’t really inspire us. We do the daily grind and, before we know it, years have come and gone. Often times, we don’t give our dreams a second thought.

Case-in-point, a friend’s father was a long-time employee at a large investment bank. Over the years, he developed a side-business running a ski lodge, which he loved, but never had time to completely devote himself to the operation. In an indirect way, the recession provided an impetus to retire from the corporate world and focus on his ski lodge full-time, and he’s happier.

Similar stories arising from the current recession abound (like the thousands of laid-off women now making a full-time living selling their crafts on Etsy).

I’m not saying that I love recessions and am looking forward to the next one, but they serve an important role in the larger picture of the capitalist economy. And as those who learned sounder financial habits, found more rewarding work, or began to follow a dream have learned, a recession change that looks like a lump of coal may actually contain a diamond.

The cash-for-clunkers bill would give a $4,500 credit to anybody who trades in an old car for a new(er) vehicle that gets at least ten miles per gallon more, or a $3,500 credit for new cars that get between four and up to 10 MPG better fuel economy. According to the current version of the bill, to qualify, the trade-in vehicle must be model year 1985 or newer, be drivable, and must be destroyed upon trade-in (it cannot be resold). Additionally, the new car purchased must get at least 22 MPG or, if it is a light-duty truck, at least 18 MPG.

Obviously, the cash-for-clunkers bill is intended to eliminate less fuel efficient cars and create an incentive to buy a car (and presumably give a boost to the flagging auto industry). Critics of the bill say that we’re over-incentive people to spend money in certain struggling industries (this program would be akin to the $8,000 first-time home buyer tax credit designed to stimulate the housing market).

Personally, I think the cash-for-clunkers bill is a great idea. (And not just because I want to see my dad get some new wheels!) Even if the economy (and auto industry, in particular) weren’t in such dire straights, I believe it’s partially our government’s responsibility to begin to find ways to reduce our dependence on oil. Although moving towards more fuel-efficient vehicles isn’t a big a step as, say, developing alternatives to fossil fuels; it’s a start. Plus, this bill pushes for greater fuel efficiency in a model that is true to our free-market economy: Drive a more fuel-efficient car, get a financial incentive. Makes sense to me.

What do you think about the cash-for-clunkers bill? A good idea or too much government involvement? Would you take advantage of the incentive? Let us know!

We can’t know for sure whether tonight’s presidential address is a form of damage control in the wake of public outcry over the $165 million A.I.G. executive bonuses or simply a continuation of reassuring public appearances akin to FDR’s depression-era fireside chats. But one thing is growing increasingly clear: it is unlikely President Obama will be able to “fix” our economy in his first 100 days in office. After all, 63 days have already passed.

Despite spending trillions on bail-outs and economic stimuli, we are still losing jobs. Credit is still not flowing. For us young Americans, our futures are uncertain. Career paths we envisioned for ourselves a year ago now may seem unattainable. Our dreams of owning our first home or even our first car may be indefinitely on hold. For many, even the security of health insurance may not be available.

What Do You Think?

Let us know: What do you think President Obama should do to boost our economy? What steps could the government take to brighten your future?

Health Insurance

It’s so critical to have health insurance, even if you’re young and healthy. An accident or sudden illness could put you in tens of thousands of dollars of debt. Worse, you could find yourself unable to get the health care you need to get better. If you’re currently employed and chose not to participate in your employer’s health insurance, reconsider it. If you’re not employed, find a way to buy your own low-cost health insurance plans (you can search hundreds of plans at eHealthInsurance.com). Even a bare-bones plan that will protect you if you face a catastrophic accident or illness is better than nothing at all.

Retirement Savings

When times get tough, a lot of people stop contributing to their 401(k) or IRA plans, especially this year when so many employers have stopped matching 401(k) contributions. Unfortunately, that’s short-sighted. The younger you are, the more valuable your retirement contributions are, because they will earn compounding interest for decades to come. Plus, the stock market is on sale these days—there hasn’t been a better time to buy stocks in a long time. Continue to contribute a minimum of 6% of your salary to your paycheck to your employer’s 401(k) or, even better, open a Roth IRA.

Education and Training

Your education and job skills are you most valuable asset. Unfortunately, I’ve heard stories of students dropping out of college because student loans fell through or they lost the job they needed to pay for school. Obviously, there are times when pursuing your degree simply isn’t affordable. But you shouldn’t let this recession deter you from accomplishing your educational goals. Use every resource available to you to find a way to pay for education and training programs that will increase your lifetime earning potential.

Healthy Food

When money is tight, it’s easy to become preoccupied with keeping a few dollars in your pocket and lose sight of other goals like eating well and staying fit. Although it may seem like a $0.99 hamburger is the cheapest way to get lunch, you’ll pay a dear price for those cheap meals if you make it a habit. Learn to eat healthy on a budget, and find other ways to save before giving up on buying healthier foods.

What About You?

Are there areas in your life that you refuse to cut back on? What are they, and why do you feel they’re important to keep up even in tough times?

The stimulus plan will impact every twentysomething differently. Whether you benefit from various provisions of the plan will depend upon whether you are a student or a worker, your annual income, and whether you lose your job, buy a home, or go through other life events.

What the Economic Stimulus May Do For You

• $400 individual/$800 couples “making work pay” tax credit in 2009 and 2010
• Temporary suspension of federal taxation on unemployment benefits
• $8,000 first-time homebuyer tax credit
• Additional tax credit up to $2,500 for higher education expenses
• Vehicle purchase tax incentives

$400 or $800 “Making Work Pay” tax credit. Designed to temporarily alleviate working Americans’ tax burdens, the making work pay tax credit would reduce federal income taxes owed by up to $400 for individual filers making less than $100,000 and $800 for couples earning less than $200,000. The credit is slated to go into effect on July 1, 2009, after which workers will start seeing about $67 more in their monthly pay that’s not going to taxes.

Temporary suspension of taxes on unemployment benefits. Many workers laid off in 2008 may be in for a nasty surprise when they do their taxes this year: unemployment benefits are taxable, although most states do not withhold income taxes from benefit checks. The stimulus bill doesn’t help people who owe taxes on 2008 unemployment compensation, but it does suspend federal income tax on the first $2,400 of unemployment benefits earned in 2009. Unemployment recipients nationwide will also see an extra $25 weekly.

$8,000 first-time homebuyer tax credit. If you buy your first home between Dec. 31, 2008 and Dec. 1, 2009, you may be able to claim a tax credit of up to $8,000 for first-time homebuyers.

Additional tax credit up to $2,500 for higher education expenses. The “American opportunity tax credit” is basically an expansion of the Hope lifelong learning tax credit. The new perk provides 100% credit for the first $2,000 and 25% of the next $2,000 on qualified higher education expenses including tuition and textbooks. This credit is 40% “refundable”. That means that even if you are a full-time student and do not owe any income tax, you can earn a tax credit of up to $1,000 for these higher education expenses.

Vehicle purchase tax incentives. If you’re in the market for a new car, Uncle Sam is going to help by allowing you to deduct sales or excise taxes if you purchase the vehicle before the end of 2009. This deduction is above the line, meaning you can claim it even if you don’t itemize. The deduction is good for sales tax on purchases of up to $49,500 and phases out for individuals with incomes of more than $125,000 and couples with incomes of more than $250,000.

Don’t drive? There’s good news for public transit commuters, too. The bill increases the amount you can set aside in pretax dollars to cover public transportation to $230 from $120. To take advantage of this benefit, your employer must provide a mechanism for you to set aside tax-free transportation dollars and allow you to spend the dollars on qualified expenses like train, subway, or bus passes.

Do you see another way the 2009 economic stimulus bill will directly impact your life? Have a question about one of the bill’s benefits? Let me know!

Preparing for a layoff is a bit like writing your own will—it’s easier to put it off the task and hope you don’t need it. But find yourself jobless in the near future; you’ll be a lot happier if you’ve done a few simple things. Here are some basic steps to prepare for a potential layoff:

Prepare for a layoff step #1: Save some cash, no matter how little.

Losing your job is the single most important reason you need an emergency fund. Haven’t started saving? It’s not too late. Save what you can.

Last week I even heard the king of debt-reduction Dave Ramsay tell a radio show caller to stop paying extra towards credit card bills and start stockpiling cash. The reason? The caller’s union was preparing to go on strike (of all times) and he could easily be out of a job in a month. You will need cash to get you through weeks or months without your salary while you find work. You don’t want to go into more debt by using credit cards to survive while you’re unemployed, and even if you have to, credit cards can’t pay crucial expenses like your rent or mortgage.

If you think your job is at risk, start diverting money to savings now. Temporarily stop paying extra on any debts, and cut back on spending where you can. Don’t stop contributing to retirement accounts, however. The stock market is on sale, and those contributions are key to recouping losses your 401(k) or IRA sustained last year.

Prepare for a layoff step #2: Know your rights as a terminated employee.

In most cases, these rights include state unemployment benefits, the ability to purchase COBRA health insurance benefits, pay for unused vacation time, and prompt payment of your final paycheck. Lauren at LifeStyler has written an excellent summary of your employee rights if you are laid off.

Prepare for a layoff step #3: Don’t rely on unemployment benefits.

If you are an employee and are let go involuntarily, you may qualify for state unemployment benefits. But those benefits will only match a part of what you earned, will only last for a set number of weeks, and are taxable! That’s right, in most states taxes are not withheld from unemployment checks. If you do go on unemployment and can’t afford to set aside roughly 35% of each check for taxes, figure out how much you’ll owe after receiving all of your benefits. When you find work again, divide that amount by the number of pay periods remaining in the year, and indicate on your IRS form W-4 that you want that additional amount withheld from you paychecks. Learn more about federally-required unemployment benefits here.

Prepare for a layoff step #4: Have your resume and references ready.

Layoffs can be painfully sudden. Some employees are lucky enough to see the writing on the walls, others are not. When a layoff hits, the employees with a fresh resume and a job search strategy ready to go will have a leg up. Remember, you’ll be reentering the job market and going up against people who have been out of work for months already. Take some time to prep your resume and know who you can call on for rock-solid references. Network with past coworkers to see if anybody is hiring; the worst that can happen is you’ll land an exciting new job opportunity before you need it!

Prepare for a layoff step #5: Relax.

In many cases, there is nothing you can do to avoid being laid off. Also, it’s not personal; it’s business. I know that first hand because I have seen employees who bust their butts get canned. Do what you can to prepare—including saving money and developing a job search strategy—but try not to lose sleep over the possibility of a layoff. Do your job well, spend time with family and friends, and take care of yourself. The fear of losing your job—or not finding a new one—is not worth your health.

Laid off and short on cash? Read about how to manage your money when you’re unemployed.

Yes, the numbers still look awful, and I’m still dealing with the impact this recession has taken on me personally. I can’t say whether things will start to turn around in three months, six months, or six years. Nobody can. But I believe they will turn around, and I believe that and in the interim, there are opportunities to learn, to save, and even to earn.

The grim reality

Economists predict the recession will persist. But for how long? One reader has a pretty gloomy outlook on the housing market. In his response to my article postulating that it’s a good time to buy a home or a car, NickZ points out several reasons you might not want to buy a house right now, including the rapidly plummeting prices of homes in markets like Florida and Southern California. He also points out many twenty somethings may not know where they’ll be working in five to ten years. Both excellent points.

In fact, even outside the most volatile real estate markets, housing prices are uncertain. Some say it could take decades for prices to recover.

Even so, if you can commit to a home for a long period of time, put 20% down, and take on a fixed 30-year or 15-year mortgage, you won’t be buying at the top of the market. You may not be buying at the very bottom, either, but I still think buying property now, (in many parts of America, at least) is still a smart play.

But it’s not just housing that’s crippled. Unemployment may get worse before it gets better. Add to that the fact that unemployment rates reported by the Bureau of Labor Statistics (BLS) don’t tell the whole story. They only include Americans who are unemployed but are able to work and who have actively looked for work in the past four weeks.

Unemployment does not include those unable or unwilling to work or look for work, those who are working part-time but need or want to work full-time, or students—including adults that have gone back to school because they can’t find work. Add all those groups up and a 6.7% unemployment rate might actually be 10%, 15%, or even 20%.

Why I’m optimistic

Without a doubt, we’ll feel effects of this recession for years. Some things will never be the same. Presumably, somebody with so-so credit will not be able get a high-rate, zero-down mortgage. Credit cards will restrict credit lines. Hopefully, Americans will spend less and save more. I believe these changes, although they require a difficult transition period, are positive.

Some changes, like the loss of U.S. manufacturing jobs, are not positive. Those jobs may not return. So not only do tens of thousands of workers need to make personal changes in order to make a living, our nation needs to do redefine itself to ensure our economy can recover from this recession and continue to grow and be competitive with other nations. I’m optimistic the new administration will make strides towards that goal.

Finally, I’m optimistic because I believe difficult economic times force us to learn, to adapt, and to innovate. Laid off workers may discover jobs—or entire career paths—they enjoy. Ideas—and the new businesses that build them—will be born from this recession. And those of us that were unprepared for the economic realities of 2008 may just be better prepared the next time good times stop rolling.

How are you feeling about the economy in 2009? Are you optimistic that things will get better? Or worried that things will get worse?