As you’ve read here several times (It’s Not a Double Dip, It’s a Depression?, 10 Signs We’re Headed for Another Recession – Or That The Last One Never Ended), I truly believe we never left the Great Recession.

Sure, in the very broadest technical definition of the word we left The Great Recession because our GDP turned positive, and the National Bureau of Economic Research declared back in September 2010 that the recession ended in June 2009.  But, again, their definition of a recession is based on a very technical parameters, mostly centered around economic growth, no matter how fake or unsustainable it may be.

The reason I bring this last point up is because most of the economic growth we saw in late 2009 through 2010 was based mostly on deficit spending – i.e. the Federal government spending money it didn’t have in the hopes of jumpstarting the economy until the private sector and consumer has recovered enough to sustain the growth.

Unfortunately, the part where the private sector and consumer spending picks up didn’t happen and isn’t going to happen for a really long time:

• Unemployment is still pretty much at the same level as what it was during the Great Recession
• Housing prices are pretty much at the same point as what they were when the market “bottomed” in the midst of the Great Recession
• Credit is just as tight as it has been, both for consumers and businesses
• Companies and consumers are hoarding cash and refusing to spend

So, again, we may have technically put the Great Recession in our rear view mirror, but, in reality, most of us can’t tell the difference between today’s economy and when the economy was falling off a cliff back in 2008.

Please watch this awesome video of an interview with Ken Rogoff, a well known economist and professor at Harvard University.  He’s smart.  And he agrees with me.

Do you agree with me, too? Leave a comment below and, as always, please share this post using the social bookmarking buttons below and at the top of the page, especially Facebook and Twitter.

It seems like an already tough time for consumers is getting even worse.

Despite a sluggish economy (which, according to Morgan Stanley is dangerously close to entering a recession, but you already knew this because you’re an avid reader of this site), continued high unemployment, and an extremely bi-polar stock market, it appears as if consumers have another big ugly problem to worry about: inflation.

Just remember, no matter how bad things get, you can't eat your iPad.

(Queue the stagflation talk…)

According to the Bureau of Labor Statistics, consumer prices jumped a whopping .5% in July, and is up 3.6% for the past 12 months.  Considering wages have barely moved over the past 12 months, 3.6% annual inflation is a big deal:

“We’re looking at a situation where income isn’t growing, so large price jumps right now without job growth and income growth behind it, basically mean that consumers are looking at more of their money going out the door at a time when less of it’s coming back in on an income side,” [Daniel] Penrod said.

(Click here to read the entire article on CNNMoney.com)

The main contributors to July’s higher prices included gasoline (up 4.7%), clothing (1.2%), food (.4%) and shelter (.3%).  Considering these are some of the main expenses account for a large chunk of a family’s budget, this is pretty sobering news for already hurt consumers and people living on fixed incomes.

You can read the entire BLS report by clicking here.

Considering the Federal Reserve recently announced it will keep its easy money policies in place through 2013, it’s hard not to imagine a scenario where inflation continues to push upward.  After all, this is more or less what the Federal Reserve wants.

Unfortunately, I think they’re going to get it in spades.

What did you think of this post?  Please leave a comment below and, as always, please share this post using the social bookmarking buttons below.

Related articles

• Stagflation signs: Bond yields down. Gold up (money.cnn.com)
• Inflation: Is it finally back? (blogs.reuters.com)

Without a doubt, the last month has been filled with economic uncertainty. The United States Congress took forever to raise the debt limit, having the new legislature signed into law the very same day the country was due to hit the debt limit. Last week stocks plunged, regained ground, plunged, and came back again.

This was one of the best selling items on Amazon.com last week.

Because of these things, fears of another world wide double-dip recession – and maybe even a depression – are starting to run through people’s minds.

Due to all of this economic and political uncertainty, people quite literally are looking for something to keep them and their cash, jewelry, gold, etc. safe.  And that’s why, according to an article published on CNNMoney entitled “Booming Business of Fear: Sales of Safes Soar,” sales of home safes and vaults climbed dramatically over the past week.

Author Blake Ellis writes:

Amid the market turmoil, sales of security safes and vaults have spiked. While some shoppers sought to protect whatever valuables they had left, others needed a place to stash their newly-acquired safe haven assets such as gold and cash.

Port Charlotte, Fla.-based Value Safes said it sold an average of $13,000 in safes a day in the past week, more than tripling its daily average of $3,500 from the previous week. On Amazon.com, SentrySafe’s $170 1.2-cubic foot combination safe was among the site’s biggest “movers and shakers” Friday, with sales rising 44% over the past 24 hours.

Print Maximum Security, which sells safes for jewelry, coins, guns and other valuables, said it has seen demand climb by more than 30% over the past two weeks.

“People are just plain scared,” said Nancy Bryan, owner of Santa Ana, Calif.-based Maximum Security, who noted that sales started increasing about three years ago at the onset of the recession.

“What is happening to our financial markets is the most recent addition,” she added. “Folks are worried about the decreasing value of the dollar, burglaries on the rise in their neighborhoods … and even the possibility that the unrest we are seeing in other parts of the world slipping over to our country.”

To me, it’s pretty amazing how much the economic outlook has changed over the past few months.  It seems just back in April, economists were calling for rapid economic expansion during the second half of 2011 and in to 2012.  Then as things like the debt-ceiling debacle, lack of job growth, and the European debt crisis began to unfold (or re-unfold as was the case with jobs and Europe) started to reign in those expectations.

Now, the expectations are so dire for some that they are purchasing safes to protect their cash and other valuables in case everything goes haywire.

That’s a really big change in sentiment for just a few months time!

Hopefully things don’t get so bad that the safes are necessary, but for only $170, it might not be a bad investment to make, especially if you don’t already have one for important documents like birth certificates, passports, titles to your home and cars, etc.

In a sad sign of the times, a recent survey found that a majority of Americans do not have enough cash in savings to be able to deal with just a $1,000 emergency expense. Considering most of us will face an unforeseen expense this large or larger in our lives, this statistic is very, very troubling.

Looks like a majority of us haven't been taking care of our piggy banks

The survey, which was done by the National Foundation for Credit Counseling (NFCC), found that 64% of Americans would have use something other than money on hand in order to be able to cover an unexpected $1,000 bill.

The largest number of close to 2,700 respondents, 36 percent, said they would tap their savings account to fund the unplanned expense. Utilizing rainy day funds for an emergency is exactly why a person saves, to protect them against the unknown. However, the remaining 64 percent are in a much different situation, living on a slippery financial slope.

The survey revealed that to resolve the problem, 17 percent of respondents indicated they would borrow the money from friends or family. Perhaps even more troubling is that another 17 percent said they would neglect existing obligations in order to satisfy the emergency need. This option can easily snowball out of control and have serious consequences. The next highest number of responses was in the category of selling or pawning assets, with 12 percent choosing this option. The resolution options of taking out a loan or obtaining a cash advance from a credit card were each selected by the least number of respondents, nine percent [each, combining for 18% in total].

Click here to read the entire press release from the NFCC.

These are certainly troubling statistics and underscore the importance of making sure you establish some sort of an emergency fund. After all, it’s not that hard to see how a random $1,000 expense can pop up once or twice per year – your car’s transmission needs to be replaced, your roof springs a leak, your refrigerator stops working, you break an arm and insurance only covers a portion of your out-of-pocket expenses… the list goes on and on.

So, what do you do if you don’t have an emergency fund? Start building one today!

The most straight forward way to do this is to combine slashing your unnecessary expenses – unused gym membership, premium cable channels, dining out, etc. – with living a frugal lifestyle – clipping coupons, finding free entertainment, hitting up the library, etc. – and then taking all that saved money and putting it into a savings account that you absolutely, positively do not touch.

This, of course, assumes that you’re not heavily in debt, in which case you should split the saved money between paying down your debt – high interest consumer debt, in particular – and building your rainy day fund.

After a few months you will hopefully you will have built a sizable enough fund that you could take on an unforeseen $1,000 expense without having to take drastic measures.

What do you think about this survey? Leave your comments below and, as always, please share this post using the social bookmarking buttons below – especially Facebook and Twitter.

Back in 2006, An Inconvenient Truth was released, and everyone went nuts over it.  “Going green” became the cause of the week, and the documentary’s “star,” Al Gore, stopped being former Vice President Al Gore, and became mainstream hero Al Gore.  He won the Nobel Peace Prize, the documentary won an Academy Award, and generally, everyone thought Gore was the greatest thing ever for warning us about being at a tipping point on the path to (environmental) disaster.

Our nation's financial house is not in order.

Fast forward to 2008. I.O.U.S.A., a documentary about dangers of the massive debt of the United States government, was released without much fanfare.  It’s “star,” former Comptroller David Walker, didn’t win an Oscar or a Nobel Peace, and didn’t become a mainstream hero even though he, too, was warning us about being at a critical tipping on the path to (fiscal) disaster.

Don’t get me wrong, I’m not saying Al Gore shouldn’t be widely hailed for helping to change environmentalism from a “hippie topic” to something that we are all well aware of and care about (well, most of us anyway).  What he did was important.

What I am saying, however, is that David Walker deserves the same sort of recognition and acclaim.

When Walker first started shouting from the mountain top about how bad things could get if we didn’t reign in spending and do something about our tax code and entitlement programs, our national debt was “just” $9 trillion.  Only three short years later, our debt as ballooned to over $14 trillion dollars, we are running annual trillion dollar budget deficits, and, on August 5, 2011, the United States’ debt was downgraded for the first time in history.

It’s clear that if we – and by we, I mean the people we elect to run amok in Congress and the White House – are running out of time to restore fiscal responsibility before we face terrible consequences like slashed governmental services, a devalued dollar, high interest rates, higher taxes and massive inflation.  But, anyone who had been listening to Walker was already aware of this.

Maybe it’s because the environment is something a little more tangible.  We can see dirty rivers and pillaged forests, and that seems to have a rather dramatic affect on us.  Plus, with the environment, we can feel like we’re doing our part by recycling, and reducing use and waste.  With the nation’s debt problem, we can’t touch it or feel like we are active participants in the act of fixing the problem.

Or, maybe it has something to do with the fact Gore was more of a household name, with being the Vice President for eight years and nearly becoming President in 2000.  I guess being U.S. Comptroller General for ten years isn’t quite as sexy.

That being said, our national something we should have taken just as seriously as environmental issues.  But, unfortunately, as evidenced by Gore’s celebrity and Walker’s general anonymity, we didn’t.

It’s no secret the economy stinks.  That’s not the question.  The real question now is: how bad will it get?

As I said in my post, “10 Signs We’re Headed for Another Recession – Or That the Last One Never Ended,” there is a laundry list of things wrong with the economy – housing is still down, unemployment and under employment is still up, credit is still tight, GDP growth in non-existant – and all of these things never really got any better since the end of The Great Recession.

Sure, there was a momentary upward tick in GDP due almost entirely to deficit spending by our government.  It wasn’t due to a true rebound in housing or job growth, two things that have normally taken us out of recessions in the past.

So, since things never really got any better, that has to beg the following questions:

1. Did we ever really get out of The Great Recession?
2. If not (which, as stated before, I don’t believe we did), are we in a depression?

I’m not ready to declare the United States economy as being in a depression, but it’s starting to get awfully close, and I think soon enough, we’ll start hearing more discussion of “the D word” as opposed to “the R word.”

Despite the fact the government and the Federal Reserve have pumped trillions of dollars into the economy, home prices are still depressed, we’re still losing more jobs than we’re gaining and the stock market is starting to crater.  And, the reason why I think we will ultimately end up in a depression is the fact the government isn’t going to be able to spend it’s way out of this downturn.  We’re already tapped out; that well has run dry.

Needless to say, I think we are on the verge of very, very trying economic times.

What do you think?  Leave your comments below and, as always, please share this post using the social bookmarking buttons – especially Facebook and Twitter.

It’s no secret the economy is not doing well. Unemployment is still close to 10%. Under employment – the figure I think gives a better representation of how bad the labor market is – stands at 18.3%, meaning nearly one in five Americans either doesn’t have a job, or is working a part-time job while attempting to find full-time work. Second quarter GDP came in at only 1.3%, and for the first six months of 2011, the economy grew at less than one

Did the America's greed push us into the first and (likely) second recession?

percent. Personal spending is down, and planned layoffs are up.

I’m sure the list could continue for a while, it’s just typing all the problems is making me kind of depressed.

All of these problems beg the following question: are we headed for a double-dip recession in 2012?

(Editorial comment: My answer is no, but not because I don’t think the economy will get worse – it will – but I just don’t really believe we ever truly emerged from The Great Recession. I think our next leg down will simply be a continuation of a recession we never really put in our rearview mirror.)

According to many leading economists, the answer is yes.

In an interesting article from The Atlantic, entitled “10 Signs a Double-Dip Recession is Around the Corner,” Douglas McIntyre, Ashley Allen, Michael Sauter, and Charles Stockdale point out 10 compelling reasons why a the economy is headed into another recession:

Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs. Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.

(I just threw the above quote in to show that I’m not the only one who thinks the last recession never really ended.)

Here’s a Cliff’s Notes version of the 10 reasons:

1. Housing still stinks
2. Credit is still really tight
3. There will be cuts in government spending because of the debt ceiling deal
4. Unemployment is still really high
5. The Chinese economy is slowing, too
6. The Government can’t spend its way out of this slowing economy
7. Oil prices are still relatively high
8. The auto industry isn’t/wasn’t as healthy as it appeared
9. Investment yields are down
10. Inflation on stuff people spend most of their money on – energy, food, health care – is still pretty bad

The Atlantic article is really interesting and goes into a lot of detail regarding the ten points above, so I recommend that you read it in its entirety if you have a chance.

I 100% agree with the article. I believe the economy is headed into the tank and the next leg down will be far worse than what we saw in The Great Recession, namely because the Government can’t spend its way out this time.

The only beef I took with the article is I wish they would have put more emphasis on the fact The Great Recession might not have ended. I think years from now, when economists and historians look at this timeframe between the end of 2007 and whenever the economy finally turns around to sustainable growth, they will see what amounts to the second Great Depression, not two separate recessions.

What are your thoughts? Leave your comments below. And, as always, please share this post using the social bookmarking buttons below – especially Facebook and Twitter.

All too often we just jam things into our wallets and purses without really giving them much thought. While it hardly ever ends up being an issue, keeping the wrong things in your wallet or purse could end up leading to a financial nightmare.

Identity theft is becoming more common - and more costly. Protect yourself!

In an interesting article on Fox Business entitled “10 Things You Shouldn’t Keep in Your Wallet or Purse,” Kathryn Toggle points out (as you probably guessed) the ten things you should avoid carrying with you and why they might be a problem:

We all make sure we’ve got our keys, wallet and phone before we head out the door, but more often than not, we are carrying around things that are better left at home. Some items we carry on a daily basis can be virtually impossible to replace, and others may leave us at risk for identity theft in the event of loss.

Obviously, I suggest you read Toggle’s article in its entirety, but in case you would prefer the Cliff’s Notes version, here is the list in its entirety:

1. Social Security Card
2. Your Passport
3. Passwords/Pass Codes
4. A Non-Password Protected Phone
5. Your Checkbook
6. Too Many Credit Cards
7. Too Much Cash
8. Gift Cards/Certificates
9. Jewelry or USB Devices
10. Receipts

The one I found most interesting was receipts:

Sometimes receipts can have your credit card information on them, as well as your signature, which thieves could do a lot of damage with. Additionally, if you’ve just purchased a big-ticket item like a new computer or jewelry, you may need that receipt for warranty purposes. “If you’re planning to use your receipts for expense purposes at work, those few hundred dollars of business receipts can just vanish and your employer might not be so understanding,” says Lin. “Get in the habit of taking out your receipts every night instead of carting them around with you.”

To be honest, even though the above explanation makes plenty of sense, I had never really given this one much thought until now. For me, the big thing would be having my signature floating around, but since I’m now trying to do a better job about keeping my recipts for warranty, rebate, and tax purposes, it makes even more sense to not cart these things around. But, considering I just recently stopped carrying around my social security card, it seems I may have a tough time making the adjustment.

Regardless, this is all great advice and, again, I encourage you to read the article in its entirety.

Are there any things you refuse to carry around in your wallet or purse? Leave your comment below and, as always, please share this post to help others by using the social bookmarking buttons below – especially Facebook and Twitter!

After months of posturing and finger pointing, it appears that the Republican led House, the Democratic led Senate, and the White House have finally come to an agreement on raising the debt ceiling and slashing Federal spending, just days before the country was due to run out of its money.  Assuming the deal passes Congress, it will keep the United States out of default — for the time being, at least — which likely would have had catastrophic consequences across the globe.

The Age of Greed by Jeff Madrick talks about how America gambled on greed - and lost.

And, true to form, there’s no guarantee that this seemingly agreed upon deal will pass both houses of Congress, which just goes to show how dysfunctional Washington has become and why much of the country is livid with their representatives.

That being said, for the time being here are the particulars, according to an article entitled “White House, Congressional Leaders Reach Debt Deal,” written by Alan Silverleib and Tom Cohen of CNN.com:

The proposed $3 trillion deal, which still requires congressional approval, brought some immediate relief to global markets closely watching the situation play out and a nation filled with anger and frustration over partisan political wrangling that threatened further economic harm to an already struggling recovery.

According to [Senate Minority Leader Mitch] McConnell and other congressional and administration officials interviewed Sunday, as well as various sources who spoke to CNN on condition of not being identified, the deal under discussion would be a two-step process intended to bring as much as $3 trillion in deficit reduction over 10 years.

Some sources provided differing targets for the total, ranging from $2.4 trillion up to $3 trillion.

A first step would include about $1 trillion in spending cuts while raising the debt ceiling about the same amount. The proposal also would set up a special committee of Democratic and Republican legislators from both chambers of Congress to recommend additional deficit reduction steps — including tax reform as well as reforms to popular entitlement programs such as Medicare and Social Security.

The committee’s recommendations would be put to a vote by Congress, without any amendments, by the end of the year. If Congress fails to pass the package, a so-called “trigger” mechanism would enact automatic spending cuts. Either way — with the package passed by Congress or the trigger of automatic cuts — a second increase in the debt ceiling would occur, but with an accompanying congressional vote of disapproval.

In addition, the agreement would require both chambers of Congress to vote on a balanced budget amendment to the U.S. Constitution. Such an amendment would require two-thirds majorities in both chambers to pass, followed by ratification by 38 states — a process likely to take years.

At this point, it would be political suicide for all parties involved if this bill did not pass and was not signed into law.  As I said before, much of the country is upset with how long this has taken and the extreme partisanship with which the process took place, so if something were to happen and the deal fell through, I think most elected members of Congress should expect a change in career path.

When you consider the possible financial ramifications of not raising the debt ceiling — the U.S. losing it’s AAA credit rating, a possible spike in interest rates and rapid decline of the dollar, and the stress caused to the world financial markets — raising the debt ceiling is a no-brainer and absolutely should not have come to this.

Keep your fingers crossed that Congress does the right thing and passes the bill and then follows through on their pledge to get our financial house in order.

Related articles

• Mitch McConnell: Congress ‘Very Close’ To A Debt Ceiling Deal (huffingtonpost.com)
• ‘Very close’ to a debt ceiling deal (money.cnn.com)
• The Caucus: Reid Backs Debt Deal and Hopes for Sunday Night Debt Vote (thecaucus.blogs.nytimes.com)

We all know that being overweight is unhealthy and can lead to a lot of chronic disorders like high blood pressure and diabetes, as well as increased chances for a heart attack and many forms of cancer.  However, did you know that being overweight can have a lasting affect on your personal finances as well?

In an article on Get Rich Slowly entitled “The Financial Cost of Obesity,” April Dykman writes that after years of research, a recent study has been able to quantify the cost of being fat in America:

After tabulating various costs associated with being overweight or obese, the researchers found that being an obese individual in the U.S. costs $4,879 for women and $2,646 for men each year. The overall annual costs of being overweight are $524 for women and $432 for men. The researchers defined “obesity” as a body mass index (BMI) higher than 30, and “overweight” as a BMI between 25–29.

A balanced diet and regular exercise can help you keep more of your hard-earned money!

Adding the value of lost life to these yearly costs makes the price tag even higher: $8,365 and $6,518 for women and men, respectively.

The analysis showed that obese women pay nine times more and obese men pay six times more in associated costs than do individuals at a healthy BMI. The results also showed that women are affected much more than men when it comes to obesity and job-related costs, including lost wages, absenteeism, and disability.

The report, which was released by George Washington University, can be read by clicking this link.

This seems to make sesnse obesity increases the likelihood of chronic diseases, which certainly are not cheap to battle.  Additionally, if someone is obsese or has had chronic health issues brought about due to obseity, they’re a lot harder (read: expensive) to insure, both for things like health insurance as well as life insurance.

Then, there’s everyday expenses – larger clothes cost more, added weight to a vehicle reduces fuel economy, more food is consumed, etc.  It’s easy to see how all these costs can quickly add up.

These costs are staggering considering they’ve been provided on an annualized basis.  So, if you spend your entire adult life as someone who is obese, you’re going to effectively waste tens of thousands of dollars.  If you would have invested the money instead, you’d be looking at probably a hundred thousand dollar or so nest egg.

This just gives one more reason why it is so important to eat a balanced diet, get plenty of exercise, and lots of sleep.

What are your thoughts regarding this issue?  Leave your comments below and, as always, please pass this post along using the social bookmarking buttons below – especially Facebook and Twitter.

Related articles

• The Financial Cost of Obesity (getrichslowly.org)
• Study Says Being Overweight Hurts Your Finances, Mental State (askthemoneycoach.com)