Is the Recession Over?

A few days ago there was another report of slight improvement in employment, for three months it has decreased from 8.9% to 8.3% lowest in about 3 years. This is a short-term calculation, and doesn’t take into consideration all of those not working or those working part-time and desire full-time employment.  5% is normal, anything north of 10% is really bad, the great recession saw 25% unemployment.  My sense talking to a lot of people, that the job market is slowly recovering which is great.  Sadly black, especially inner-city youth the number is much higher. For some alternative unemployment statistics go to http://www.shadowstats.com/alternate_data/unemployment-charts, which may illustrate the real much higher unemployment picture, which also shows improvement.

Are we still in a recession?  Recessions by definition are a business cycle retraction of two down consecutive quarters of GDP, or a 12 month 1.5 rise in unemployment. So technically the country is not in an official recession. There have been other positive indicators from industry that our economy is improving, so I have reason to be a guarded optimist.

From a personal finance perspective, many households are in a recession, because it will take more than a few good economic quarters for many to recover to pre-recession finances. Household finances recover when savings are replenished, debt is reduced, salaries increase- all allowing for more disposable income, which fuels consumerism and thus the economy.

Some people have the expectation in the back of their minds that they hope for the good old days of the mid 1980’s of nearly 10% GDP, or the later years of the 1990’s that had several peaks above 5%: Sourcehttp://www.tradingeconomics.com/united-states/gdp-growth.  It would take quite a bit of economic change for us to enjoy a high GDP, when you consider; economic growth is very slow, debt is massive individually and many countries, and entitlements are a huge problem in many industrialized nations. This all weighs things down, such as hiring, and wage increases making personal household finance’s recovery long-term.

The current value of some foreign currencies increasing, has been good for the US economy, such as Honda’s plans to move more manufacturing here. The other day I saw an article about a company headquartered in India opening a call center in Texas. Other economic things to be positive about are low-interest rates, personal debt decreasing and savings increasing.

I don’t expect any boom times again for the foreseeable short to intermediate term, for Americans to ride a wave to financial recovery. We are not unmoving ship at sea in the doldrums, there are winds in the sails, and some economic storms ahead.  Households would be wise to extract whatever wind that hits their sails, and stick to wise foundational personal finance habits: saving, living below means (spend less than make), giving, re-paying all debt and acquire no new debt, beware of schemes to get rich, and some start micro-businesses. In fact these are good habits to exhibit in all economic environments, we just are being forced to now. These are character, wisdom, learning and faith building times.

Christians should have peace no matter how bad things get, and level heads if the economy booms. God is in control, and he is the source of our daily bread, no matter what the headlines of the daily paper read.

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