Kicking off 2009, I’m optimistic about the economy. Are you? What do you think 2009 will hold for the economy and for your own finances?
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?