Saving, Investing and the Economy

This is generally a finance and investing blog for young savers. Sometimes you need to talk about the economy to talk about saving and investing.

Anyway, I am now of the opinion that this may a bit more of a protracted recession than I had originally thought. Late last year there was the talk of a possible recession. Early this year the odds began increasing on an almost daily basis. Now, I think that we are in a recession, though it won't be official for a few months. This may be just personal experience, but the company I work for is beginning to brace for the worst - no raises, no travel, etc. I think that bad numbers from a lot of companies are going to begin coming in soon.

Like I said above, I am starting to be concerned that this is going to take a couple of years to work itself out, rather than the 6 months or so I originally thought. There are just a lot of fundamental problems that need to be worked out. Namely, CREDIT. In the 90s, the economic expansion appears to have been built on gains in productivity. Unfortunatly, the expansion of the 00s was built on credit. People were first fueling the economy by saving less and less. Then more and more credit card debt. Finally, home equity loans and the like. Now, the nation is simply tapped out. Even the federal government doesn't have anywhere to go. What can they really do - cut taxes more (I mean something in addition to the rebate/stimulus plan). A nice idea, but not with the current budget.

I place the blame for this recession at least partly on the backs of the spenders. Maybe a few more savers in the land of the free wouldn't be too bad.

Check back for posts on saving and investing in a slowing economy.