Accident Recovery Blog: The Economy is Down

The Economy is down, but economists are optimistic


In 2012 we saw the first shrink in the GDP (Gross Domestic Product) in 3 ½ years.  Ever since we climbed out of the so called “recession” the economy has been on a steady increase.  This last quarter the GDP made a full reverse from 3% increase to a decreasing rate of 0.1%


The shrink is being blamed on “fear” more than anything.  Towards the end of last year we had the looming fiscal cliff to worry about, as a result many business owners were slow to restock their goods for fear of lowered demand.  That lull in business combined with a decreased level of exports and the financial slowdown that happened waiting for our representative to get off their collective ‘asses’ and make a decision, resulted in a sort of financial “hiccup”


The belief is that the drop is temporary and that by the end of this quarter we will be back on a road of healthy economic expansion.  Tim Hopper, chief economist at TIAA-CREF described the phenomenon as "a giant hand holding down the economy”, once those factors are out of the way, growth should be able to increase once again. Will that make a difference here in Laredo? Possibly.


Last year saw an increase in car sales to heights it hasn’t seen on over 5 years and housing production has increased dramatically as well.  All this being said the economy doesn’t appear to be as strong as people hoped it would be going into 2013.  Many economists are putting their hopes in the housing market making a big upturn and driving a major part of the economic growth.


Is that possible? Well ‘the powers that be’ certainly seem content with the possibilities.  Every economist that gets on the TV or any senator or congressman pressed for an answer will all tell you everything is hunkey dorey.  Well I know a few failing business here in Laredo that might disagree.  Unfortunately we like it when our representatives lie to us, they’re here to keep us calm more so than keep our money safe.  I mean I’m sure if you asked Ben Bernanke a month before the market crash 3 years ago how he felt about the economy, he’d say some nonsense like, “she’s strong and getting stronger”.


Of course there are always the many voices of doom out there that foresee an imminent market crash.  I’ve always been a bit of a conspiracy nut myself, but it just seems like both sides only seem to talk in rhetoric or scare tactics.  Still, there are trembling’s in the force:  Billionaires and foreign investors dumping stocks at alarming rates and renowned economists explaining how the level of unemployment is increasing exponentially to disastrous effect.


So what to do? What can you do? Well for starters, you should do what you should always have been doing, regardless of the economy.  Making more sound financial decisions.


Are you saving some money? Are you making sure to save any portion of your paycheck, try small at first. 50 bucks a month – after a year you’ll have save $600. It’s no treasure trove, but it’s a start.


Are you investing in stable entities, like Gold and Silver?  People think that it’s crazy scammer talk to stockpile gold. The truth is that gold and silver tend not to decrease in value, making it a handy thing to have around in case of a big market crash.


How’s your credit? Are you living within your means? Always try to buy things you can afford.  Never just buy on credit with the hopes you’ll have the money in time, make sure you’ve got steady income and a healthy back up plan when buying any big ticket items on credit.


You always have options. You could run and hide under your bed like the boogeymen would have you do, or you could just spend like there’s no tomorrow like the other half wants. I’m an ever follower of the Buddha, the middle path.  The economy needs growth so you need to buy, but it also needs stability so you must also produce something, simultaneously we all need to help each other, which is why investment is crucial as well. 


The economy may seem like a bunch of gobbledygook to you, but I always find applying common sense to complicated tasks will always make for an easier decision.


Happy Spending Laredo!