If you haven't heard, the economy is NOT good. The market continues to tumble, home prices have dropped, foreclosures are at an all-time high, credit is still hard to attain and consumer confidence is uncertain at best. Welcome to 2009.
The main question on local minds is: How do we avoid this crisis in the
Saratoga region? The answer is simple and fun: Keep spending. Did you
get that? No, I am not crazy. Let me explain.
Obviously there are several fundamental problems at the national level. But many problems, especially those related to the stock market, are the result of fear-driven economics.
The main problem with fear-driven economics is that fear breeds fear which breeds more fear, etc.
As we see with this model, much of the economy is based on feelings and mood. The positive of this model is that feelings and fear can change.
Three of the main areas that weigh heavily on American minds are unemployment, home foreclosure and retirement savings.
Let's take a look at some numbers. The local unemployment rate is approximately 5.6 percent. That means that 94.4 percent of the workforce are actively employed earning a living just like they were a year ago, or not currently looking for work.
Foreclosures may be at an all time high but 88 percent of Americans are still paying their mortgage in full and on time.
While most retirement funds show rather substantial unrealized losses, if you aren't retiring now or in the next few years there is no need to worry. The market will bounce back, and during this downturn there are wonderful buying opportunities that allow savvy investors to dollar cost average their investments.
So now that we see that the world isn't really falling apart, how does spending money help?
It is simple. The local economy will continue to backslide because of reduced purchasing by scared local residents. Those of us that have not been affected by job loss need to go on living and spending. We need to keep our local economy vibrant, active and keep the money flowing in our local economy.
More local spending means improved local profits. Improved local profits means less local layoffs. Less local layoffs means lower unemployment and higher disposable incomes. Higher disposable incomes means more local spending...and so on...
So get downtown and buy that new pair of pants or dress. Enjoy dinner out with your significant friends. Purchase that new front door for your home. End your week with a relaxing facial and massage. Is this a simplistic approach? Maybe, but it is a good start.
I urge everyone to stay positive, keep working hard, and let's all be part of the solution, not part of the problem.
Obviously there are several fundamental problems at the national level. But many problems, especially those related to the stock market, are the result of fear-driven economics.
The main problem with fear-driven economics is that fear breeds fear which breeds more fear, etc.
As we see with this model, much of the economy is based on feelings and mood. The positive of this model is that feelings and fear can change.
Three of the main areas that weigh heavily on American minds are unemployment, home foreclosure and retirement savings.
Let's take a look at some numbers. The local unemployment rate is approximately 5.6 percent. That means that 94.4 percent of the workforce are actively employed earning a living just like they were a year ago, or not currently looking for work.
Foreclosures may be at an all time high but 88 percent of Americans are still paying their mortgage in full and on time.
While most retirement funds show rather substantial unrealized losses, if you aren't retiring now or in the next few years there is no need to worry. The market will bounce back, and during this downturn there are wonderful buying opportunities that allow savvy investors to dollar cost average their investments.
So now that we see that the world isn't really falling apart, how does spending money help?
It is simple. The local economy will continue to backslide because of reduced purchasing by scared local residents. Those of us that have not been affected by job loss need to go on living and spending. We need to keep our local economy vibrant, active and keep the money flowing in our local economy.
More local spending means improved local profits. Improved local profits means less local layoffs. Less local layoffs means lower unemployment and higher disposable incomes. Higher disposable incomes means more local spending...and so on...
So get downtown and buy that new pair of pants or dress. Enjoy dinner out with your significant friends. Purchase that new front door for your home. End your week with a relaxing facial and massage. Is this a simplistic approach? Maybe, but it is a good start.
I urge everyone to stay positive, keep working hard, and let's all be part of the solution, not part of the problem.
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You have hit the nail on the head. With our economy being over 70% consumer purchase based, any activity of this nature has a ripple effect. Can we buy our way out of a recession? Maybe. But we can certainly make things much worse by sitting on our wallets.