What's happening with our economy?
Let's take a look at our struggling economy and where it might be headed. The strength of the economy is measured by GDP, or Gross Domestic Product, which is a combination of consumption, investment, government spending, and net exports. An increase in GDP means that the economy is moving in the right direction, while a decrease means that the economy is contracting. Nominal GDP is measured in current prices, and real GDP is adjusted to account for inflation. A recession is considered by many to be two consecutive quarters of decline in real GDP. However, most economists agree that we were in a recession for all of 2008, even though the economy showed positive numbers until the 3rd quarter. It looks like 2009 is going to be worse than 2008 from an economic perspective. This year's economy is expected to contract for the first 3 quarters before the light at the end of this long tunnel starts to shine.
If we are looking for bright spots (and we certainly are!), the index of leading indicators has been up for the last two months, suggesting that the economy may improve. We are also in the midst of the lowest interest rates that many of us have seen during our lifetimes. If you're investing in fixed income securities, make sure you keep short because rates will most definitely be higher two years from now when we will be fighting inflation and not a struggling economy.
If you haven't refinanced your mortgage, do it now! It also looks like there may be some life in the stock market! Maybe like spring, the economy will begin to grow as the temperature warms up.
If you have a job, keep it. If you are looking for one, take comfort. Jobs will increase as we get into the summer season and as the stimulus dollars get out there.