What are your thoughts on a recession?

[dmmiller]

With all this talk of being in a recession and impending doom.. I was wondering
what are your thoughts...

Do you think we're in a recession?
If not, do you think we'll be in one soon?
How do you think we'll be affected by a recession?

They were saying this morning on the TV that some experts say we 'are' in one and it will be the worst any of us has seen.
And that its going to last a long time.

[conj]

I'm against it

[Marcster]

They were saying this morning on the TV that some experts say we 'are' in one and it will be the worst any of us has seen.
And that its going to last a long time.

Bad news sells papers & increases viewership.

Try this -- avoid watching the news or reading the paper for one day a week. You'll be amazed how much better you feel, if only for one day. :)

[kranky]

I think we are seeing the start of the US losing its crown as the greatest country in the world. I'm no economist, so I see things in simple terms.

We buy critically essential things from other countries that we no longer make (or know how to make). We have done nothing to reduce our dependence on foreign oil. We spend money we don't have. We have so many unnecessary regulations which is why a bridge costs $500 million instead of $100 million. The only growing industry is govenment employment, which also comes with huge pension obligations. People thought a "service-based" economy was the ticket to the future, but pushing papers and electrons around is no replacement for jobs in manufacturing where actual goods are produced. Our huge technology edge is being given away to China so companies can make an extra buck today.

We have long ago squandered our wealth. Other countries are starting to wake up and realize they would be better off getting paid in Euros rather than dollars, because we keep devaluing the dollar. We pretend inflation is under control by changing how we measure it, or not publishing it at all (as when they stopped releasing M3 numbers on the money supply). This will have serious implications as everything imported will go up in cost, but we no longer make a lot of those things here so we don't have any options.

Gas is headed to $4 a gallon and up, but wages aren't moving. It's not just the gas price, it's what the gas price will do to the price of everything else. Food and other goods will go up.

So, I don't know what the academic definition of "recession" is, but I know tough times are coming and there's no quick fix.

[dmmiller]

heck, i dont have to watch the news.. just read Kranky's reply, and thats enough to
depress anyone. :tongue1:

The said that Bread even doubled in price.
I guess its time to either make my own, or buy a bunch and freeze it? :(

[dtdoda]

You will see the European market start dropping rates soon. They have to. This isn't a US economic issue. It's a worldwide issue.

I'm convinced that the Fed doesn't care as much about inflationm these days as they do job growth.

Cutting interest rates will increase exports eventually and should spur job growth.

That said, we're heading for a correction.

This econopmy has been driven by consumer spending and debt for years. That can't go on forever. At some point, the bills come due.

These stimulus checks are just more of the same. A stupid idea.

[kranky]

I'm convinced that the Fed doesn't care as much about inflation these days as they do job growth.

Probably true. Inflation is a benefit to those in debt, and the US certainly has enough debt. The people who aren't in debt certainly aren't going to like it, though.

[theresamax]

I know I feel like I have a knot in my stomach. There aren't many jobs so you have to worry about keeping your job and not making any mistakes. I made a mistake at my job today and thought I was going to have a heart attack and that coupled with all the recession fears no wonder everyone is so anxious. Why do they keep saying we are headed for a recession but we never seem to actually be in one?:no:

[hwolf6330]

Do you know I was thinking about starting a thread about this too. You beat me to it, lol.

I think no matter what they call it recession or economic slow down it makes you think about what kind of a financial situation you are in. I know for me personally I cut back alot on my shopping and watch every little thing I spend. I was what you would call a shopaholic and just buy things because they were on sale. It was hard at first but now it's not so bad anymore. I know I won't be stimulating the economy any time soon.

[dmmiller]

Im trying to budget $300/every 2 weeks, for groceries for a family of 5, and if these
prices keep going up, i'm going to have to increase that amount and thats gonna mess
up my plan :( And dont get me started on Gas prices!

[Marcster]

I know our situation isn't universal, but here's our current situation:

My wife is a paralegal for a growing/expanding law firm. They are currently short two paralegals and have been since January. It's not for lack of trying, they've been advertising in the appropriate classifieds and have been holding interviews but just haven't been able to find appropriate (or in some cases, appropriately trained) candidates.

The lack of paralegals is actually making it a challenge to expand because you can't just keep adding attorneys without the proper support staff. As it is, my wife is putting in 10-15 hours extra per week to help make up the difference (the deadlines don't go away just because you are short-staffed). She's salary, so you just hope that they remember the overtime at bonus time.

And they're holding interviews -- just can't get the qualified applicants.

I have said to my wife that they should divide the money that they would be paying the two missing paralegals between the ones that are working extra... At least that would make it worthwhile.

And my business... I usually have a slowdown between Thanksgiving until now (mid-March). But, I've one of my busiest quarters ever and have even begun raising the rates of some of my customers, for the first time in years. Not because the costs are inflation-related, but because I can only work so hard and if people want me to work harder, I should be compensated (it will also be the first price increase for some of my clients in six (6) years).

So, how about this for a flip to a bad economy? -- we're looking to move closer to my wife's job (she's currently commuting 2 hours a day). That check we're supposed to get this Summer to stimulate the economy? -- we'll be spending it on moving expenses...

I know that we're doing our part to help the local economy... In our (almost) 9-year marriage, we've never gong out to eat more often (and plenty of take-out since my wife is usually whipped when she gets home - and I don't have the time). We also shop more because if you're working extra hard, you feel that you deserve to spend more to make it all worthwhile.

[dmmiller]

I know what you mean about having a bad commute.
DH drives an hour each way to work. The only thing that saves him is
he works 24 hours shifts and only about 12 shifts a month. OT when available.
He's got alittle saturn that he climbs in/out of. (he's 6'3", so its rough on him)
We have a deisel F250 that sits in the driveway. :(
Cant sell it, till we sell the camper.

[mugs]

I'm against it

:g_thumpsu

[nnmfam]

I think we are in one of course they will not admit it. I am to disgusted to watch teh enws about theforeclosures. They calim it is subprime lets see my expenses are up 200 a month in property tax increase, gas was 1.06 here in nY in sept 2002 ( Was looking at daughters baby book) it is 3.38 today so we spend about 400 a month on gas so DH can get to work that moved 45 minutes away . Grocereis used to cost me around 100 a week last year cost me 130 now For less food. Health insurance was 35 a week with no copays is now 300.00 a month with 30 copays ( I have lupus and severe asthma) so about a hundred a month for me Raises what raises come on. THings need to change and we all need to stick up for our selves . I think if we all sit here and keep taking it quietly we could very well end up in more the a recession more like a depression.

[guilliam]

The economy in my area is in big trouble too. We've had 2 MAJOR factories either close or pick up and move out of state recently, and another major employer has been laying off in groups for the last several years (dh was part of this most recent group about a month ago) and there are NO jobs that pay over minimum wage available anywhere near by! And we're talking 150 mile radius! The area is slowly drying up as people move away to find jobs, which causes more jobs to be lost :( And if dh doesn't find a job soon, we'll be moving too

[mudechevy]

I can definitely say we're not in a good place. Dh was out of work for over 8 weeks while Tousa got their chapter 11 butts in order. He pounded the pavement, found every bidding site, craigslist, career builder, faxed resumes, etc..to find framing work. The only thing being built in Central Florida is commercial. The commercial guys are being run off by residential guys low balling all of the jobs. Framers here are paid around $2/ sf (add more for custom or commercial) and dh has seen bids as low as .80/sf. No one can make a living off of that unless your illegal without insurance.

He did start back to work about 2 weeks ago but there's no telling when it will stop again.

I think this "recession" is a product of Keeping up with the Jones'. To many people value themselves on the price of their handbag. That's really sad. If you want it and can afford it, great! But don't put it on a credit card just because your friend has one. Same goes for cars, $400k houses, etc.. <--- That's not the case in every situation but I know it's a contributing factor.

[dmmiller]

The economy in my area is in big trouble too. We've had 2 MAJOR factories either close or pick up and move out of state recently, and another major employer has been laying off in groups for the last several years (dh was part of this most recent group about a month ago) and there are NO jobs that pay over minimum wage available anywhere near by! And we're talking 150 mile radius! The area is slowly drying up as people move away to find jobs, which causes more jobs to be lost :( And if dh doesn't find a job soon, we'll be moving too

You sound like you live where we use to live in Ohio.
Is it near Steubenville? We use to live in Bloomingdale/unionport area.

[Rockfordmom]

They have been talking about us going into a recession for the past 8 years now. The Democrats blamed it on the Republicans taking office when Bush became president, and the Republicans blamed it on the excesses of the Democrats and said it just caught up with us after Bush became president. As for property taxes they go up every year, the price of groceries goes up all the time, and so does health insurance and co-pays; it has nothing to do with a "recession", the price of stuff just always goes up. How much longer can we be going into a recession?

Now gas prices have skyrocketed and that has to do with our dependence on oil/gas, and supply and demand. Americans depend on a lot of oil, and those with the supply (ie: Exxon...) can and do charge whatever they can get away with charging. Exxon has the highest profit for any company in the world ever until it breaks it's own record the next quarter and then breaks that record the next quarter.

[pryan67]

well, as for exports...what would you rather have:

1. 80 dollar t-shirts (made in the USA by highly paid workers)

2. 3 dollar t-shirts imported?


when you're paying a factory worker more than an engineer...there's a problem...and of COURSE companies are going to find ways to lower the single most EXPENSIVE part of any business...labor costs....


gas prices have NOTHING to do with who's in office...it has to do with the market forces...speculators buying and selling oil futures...those speculators are you and me BTW...if you've got a 401(k) or mutual funds...

[guilliam]

You sound like you live where we use to live in Ohio.
Is it near Steubenville? We use to live in Bloomingdale/unionport area.

No, we are in north east Ohio. East of Columbus

[hwolf6330]

The economy in my area is in big trouble too. We've had 2 MAJOR factories either close or pick up and move out of state recently, and another major employer has been laying off in groups for the last several years (dh was part of this most recent group about a month ago) and there are NO jobs that pay over minimum wage available anywhere near by! And we're talking 150 mile radius! The area is slowly drying up as people move away to find jobs, which causes more jobs to be lost :( And if dh doesn't find a job soon, we'll be moving too

I remember you posting before about where you work. Do you guys both work at the same place? I didn't want to mention where you work in case you don't want it to be known. I have heard for a while now that sales have slowed down for that company. I guess people have to be more careful where their money goes. It's sad. I guess you guys are kinda out in the middle of nowhere. I hope everything works out for your family.

[guilliam]

I remember you posting before about where you work. Do you guys both work at the same place? I didn't want to mention where you work in case you don't want it to be known. I have heard for a while now that sales have slowed down for that company. I guess people have to be more careful where their money goes. It's sad. I guess you guys are kinda out in the middle of nowhere. I hope everything works out for your family.

hwolf6330-
Yes, we both did work for the same place ;) I'm still there cause I started 2 years before dh. DH did go for a job assessment a week and a half ago, so we've got our fingers crossed that he will get called soon for an interview (they were originally told they would hear something last week but someone we know who works there told us management wasn't there last week so it would be later they thought) So I'm trying to hold onto a little hope for that job. It would make a world of difference in our lives :yup: Than you for the kind words:)

[herculesmomma]

I live in Michigan and we've been in a recession for about 3 years now. So this national recession (yes, I think we are in one) should hardly be noticable to us.

[dmmiller]

So what would you all think about taking money out of your retirement to pay off your debt? With the stock market doing what its doing, we're not making any money at this time.. in fact losing. So would it make more sense to take money out of Dh's retirement to help us pay our debt off faster and then use that money we would have paid on bills to rebuild it back up afterwards? (and hopefully by then, the market will be up to par again).

[kranky]

So what would you all think about taking money out of your retirement to pay off your debt? With the stock market doing what its doing, we're not making any money at this time.. in fact losing. So would it make more sense to take money out of Dh's retirement to help us pay our debt off faster and then use that money we would have paid on bills to rebuild it back up afterwards? (and hopefully by then, the market will be up to par again).

Would it be a withdrawal from a 401k plan, or a LOAN?

If it's a withdrawal, you will have a huge tax bill to pay - you will owe regular income tax on what you take out, PLUS a 10% penalty on top of that.

If it's a loan from your own 401k account (your 401k plan must allow loans), you won't have to pay a penalty but you end up using after-tax money to repay pre-tax money. In other words, if you withdraw $3000, you might have to earn $3600 to pay it back. And if for some reason you lose your job, you have to pay the outstanding loan back immediately or it's treated as an early withdrawal.

I am very reluctant to recommend taking retirement money to pay bills, even in today's situation where the market isn't doing well.

[dmmiller]

yeah, okay.. bad idea. :) Cuz either situation doesnt sound very good. :(

I guess I"ll just suck it up and watch it vanish before my very eyes. LOL
I heard them talk about it on the today show, and thought I'd ask for opinions.
I dont know much about DH's retirement anyways, so I dont know which situation we'd
be in.

[hwolf6330]

We have taken loans out of dh's 401k before. We have to pay ourselves back plus interest. I guess it would depend on your dh's job security whether or not it would be a good idea. We figured it beat paying high interest rates on a loan. When we built our house dh took out a withdrawal, not a loan for downpayment and closing costs. We didn't get any money back that following year when we filed our income tax. I think we may of had to pay in some but it wasn't much since we usually get a good bit back anyways.

[hwolf6330]

On another note......

They are talking about lowering the interest rate another point today. It sounds all well and good but is it really helping anything? Has it really lowered the mortgage interest rates? The only thing I am seeing is that the interest rates are dropping for savings and such.

[nelly]

yeah, okay.. bad idea. :) Cuz either situation doesnt sound very good. :(

I guess I"ll just suck it up and watch it vanish before my very eyes. LOL
I heard them talk about it on the today show, and thought I'd ask for opinions.
I dont know much about DH's retirement anyways, so I dont know which situation we'd
be in.

Do you guys have a 401k? Is that the retirement income your dh has? I ask because there are things you can do to not loose money, or at least not that much. Unfortunately, it takes time to research and it is a learning process but it can be done if you would like to look into it.
If he has a 401k, like my dh does, then he probably has a variety of choices. Look into those mutual funds and see what they are investing in. Move some of your money into funds that you think (through research and listening to programs that talk about this) will continue to do ok. For ex., everybody will still need to buy food even in a recession, so you might look into those type of companies.

Make sure he does not have too much invested in his own company cause that is pretty dangerous. You guys really need to spread your investment to minimize losses.

One of the things I learned in the university, in my finance classes, was that when you are in the stock market/mutual funds you are in it for the long haul. And I do mean long haul as in 20+ years. The ups and downs that the market experiences are normal but in the long run everyone usually gets a higher return than in other forms of investments.
I really dislike how the news programs make it seem all gloom and doom. If you are saavy enough w/some basic knowledge of the market then you'll even be glad that your money will be buying more stocks (something like that, maybe somebody can expand on this).
Anyway, good luck. If you are able to pay your bills now and at least pay the minimum on your debt, then I wouldn't be too, too worried. Obviously you want to put more than the minimum so if you can then that'll be great too.

[freesia39]

for me personally, it's great. the housing market is slowly starting to dip and i need prices to drop before i can feasbily buy anything that resembles a house. or for more foreclosures to hit the market and maaaaaaaybe i can pick something up at an auction. all i know is the listed price probably won't be the price it's sold at for quite a while.

[mom2monkiesx3]

I'm against it

I'm with you :D

[dtdoda]

A rate cut on short term interest rate cuts will have very little effect on mortgage rates. In fact, rates have been increasing recently, not decreasing.

Bond investors drive long term rates and those determine mortgage rates.

Mortgage rates have been increasing the past few weeks because the bond markets are wary of inflation. Any additional rate cut buy the Fed will just increase the anxiety in the bond markets.

[hwolf6330]

A rate cut on short term interest rate cuts will have very little effect on mortgage rates. In fact, rates have been increasing recently, not decreasing.

Bond investors drive long term rates and those determine mortgage rates.

Mortgage rates have been increasing the past few weeks because the bond markets are wary of inflation. Any additional rate cut buy the Fed will just increase the anxiety in the bond markets.

So basically it is doing more harm than good in my opinion.

[jk1926]

By cutting the Fed rate the Central Bank makes it cheaper for banks to borrow money. In this case the savings are not getting completely passed on directly to the consumer (unlike in 2003/2004) because the banks are pocketing the margin.

This is not necessarily a bad thing as the banks are taking a beating on their non-performing loans. Ultimately consumers are better off with a healthy banking industry than a battered one. It makes cash more available to consumers and businesses alike. Otherwise there would be a severe credit squeeze and even those consumers who should get credit extended would find it harder to obtain.

[dmmiller]

Thanks for the feedback everyone. I'll have to do some more research on my DH's retirement.
His job is pretty secure.. well as much as a fireman can be. He's been there for about 6 years, so there are a number of people hired under him, so if there were cut backs, I think he'd be pretty safe.

[siczlo]

I think we are in one of course they will not admit it. I am to disgusted to watch teh enws about theforeclosures. They calim it is subprime lets see my expenses are up 200 a month in property tax increase, gas was 1.06 here in nY in sept 2002 ( Was looking at daughters baby book) it is 3.38 today so we spend about 400 a month on gas so DH can get to work that moved 45 minutes away . Grocereis used to cost me around 100 a week last year cost me 130 now For less food. Health insurance was 35 a week with no copays is now 300.00 a month with 30 copays ( I have lupus and severe asthma) so about a hundred a month for me Raises what raises come on. THings need to change and we all need to stick up for our selves . I think if we all sit here and keep taking it quietly we could very well end up in more the a recession more like a depression.

I agree! EVERYTHING has gone up faster then raises. Groceries, Gas, and Health Insurance especially! My utilities come to &550-$600 a month, and that's with Basic Cable and energy saving bulbs! My Dh and I first apartment was $612!

[Kayakmom]

My cousin bought his house 7 years ago and his property taxes were $2,800 and his electric was about $150/month. Now his property taxes are $7,600 and his electric is about $400/month. He has not had a significant pay increase during that time and he is choking badly.

We're house shopping and I'm in such a quandary. We can afford the house we have now, even in the worst of times. (I know this because my dh was laid off for 13 months once and we sustained on income he made from cutting lawns at the golf course.) Even if we move to a house with a comparable price, what happens when a zillion things break, because they inevitably will. What happens when we fix it up and then the tax bill shoots sky high? My big thought is, "Is the known better than the unknown?" I also know that the price of my current home has remained totally stable to this point and, even in a slowdown, will not devalue quicker than things around us. Sooo... in this current economy, will waiting another 3-6 months until the market further floods with foreclosures be a benefit or a drawback? Will interest rates stabilize, increase, or decline? Some forecasters see them hitting record 5 year lows by May, but I'm not inclined to want to jump right on the bandwagon. There are just so many considerations to make and I will do everything in my power to ensure that we are never one of those families losing their home because they borrowed what the mortgage company said they could have. Of course, you never know what the future will bring and nothing in life is certain. Good things can come from taking chances. However, with four little kids, I feel that I must do everything in my power to mitigate the chances of major financial problems for our family in the future.

Another option I'm considering is moving to a slightly larger house in a much less expensive town. We would be upsizing in square footage, but downsizing our actual mortgage and tax payments. Of course, utilities and such would be higher. However, the drastic price differential would allow us to bank about an extra $50k, even with lower monthly payments, which would really bolster our nest egg. Decisions, decisions. The big drawback with this decision is that I'm pretty particular about my childrens' education and I could end up becoming a home-schooling mom, which I'm not sure I want to take on.

I really envy first time buyers now. They're going to see some prime opportunities in the coming months. Be patient, build your downpayment however you can, line up financing, and just wait and watch carefully!

[dtdoda]

My cousin bought his house 7 years ago and his property taxes were $2,800 and his electric was about $150/month. Now his property taxes are $7,600 and his electric is about $400/month. He has not had a significant pay increase during that time and he is choking badly.

We're house shopping and I'm in such a quandary. We can afford the house we have now, even in the worst of times. (I know this because my dh was laid off for 13 months once and we sustained on income he made from cutting lawns at the golf course.) Even if we move to a house with a comparable price, what happens when a zillion things break, because they inevitably will.

That is absolutely the correct thinking. When the RE agent tells you that you can afford X, they're maxing you out. You need to look at what you can afford even when these other expenses come up.

I have a friend who bought as much as house as his agent told him he could afford. 2 years later, he now needs a new heating system. Problem is, his budget can't afford it.

[scrapwave]

I'll weigh in and say that I normally don't watch the news or read the crap in the papers, etc.
I do know from firsthand experience though how the economy is sliding downhill fast. DH is an owner/operator of a grain truck/trailer. The price of fuel alone has, at this point, shut our truck down. We can't even afford the fuel to keep the truck running in order to make a living. The few loads we were getting were only paying about $100-$150 above the cost of fuel. With a $1400/mo truck & trailer payment and $400 for truck insurance, that kind of "profit margin" leaves us absolutely nothing at all to pay any household bills or normal living expenses with. The price of grain has gone up--costing the dairymen more to buy so they are buying less--that equals less loads for us to haul. And, the price the trucks are getting paid to haul that grain hasn't really increased enough to keep up with the skyrocketing fuel prices.
So...from my personal perspective...things really couldn't look much worse. We are now seriously having to look at filing bankruptcy and letting the business go. Probably the only thing we will be able to save is our house since it's owner financed and we only owe 3 more years on it..and we can claim the homestead exemption on it in BK court. Looks pretty darn grim from where I'm sitting. :(