Is America in recession? What strategies can we adopt in such times?

By the way, what is recession? Business guys, economists keep using it. Sales people use inflation and recession often; these 2 words are frequently used as an excuse to jack up prices, what does “Recession” mean after all??

The dictionary meaning of this term is – A recession is a contraction phase of the business cycle. A common rule of thumb is that a recession occurs when real gross domestic product (GDP) growth is negative for two or more consecutive quarters. In the USA, the National Bureau of Economic Research (NBER) defines it more broadly as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A sustained recession may become a depression.

On Apr 29th 2008, a survey of 52 Economists by USA Today says that 2/3rd of the Economists polled believe the country is in Recession. Martin Feldstein, President of the Cambridge group on March 18th 2008, said that the US has slipped into deep recession, much more serious than the World War II times. According to majority of CFOs and CPAs surveyed by the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan Flagler Business School on August 14, 2008, reveals that U.S. economy has already entered a recession and the outlook remains negative.

 (http://fmcenter.aicpa.org/Resources/Resources+and+Tools/3rd+Quarter++2008+Economic+Outlook+Survey.htm)

Other indicators of weakening American Economy –

  1. GDP rate contracted in the 4th quarter by 0.2%
  2. GDS (Gross Domestic spending) shrunk by 0.5%
  3. Domestic profits plunged by $ 125 billion
  4. Sinking housing prices
  5. Months of job losses, 51K was the latest number from the job loss reports
  6. Turmoil in the financial markets.
  7. Soaring Oil prices ($145 a barrel, record highs) and overall increase in commodity index
  8. High Inflation – Currently stands at 5.6% v/s 2.74 as of Jan 2000

Now it’s clear that we are in recession, atleast the economists and statistics say that we are not in good times. WHAT DO WE DO NOW?

Answer is simple – Derisk!

  • There are 100’s of business which are Recession free…. START YOUR OWN BUSINESS – Own Franchises, Start a Technology consulting business, Outsource Manpower, Start a Freelance Business, Open a School/Day care/Restaurant/Grocery store etc. 
  • Deposit money in high interest earning CD’s – In an inflationary environment, bank Deposit rates are hiked. People with excess cash can deposit in high interest bearing accounts with FDIC insured banks.
  • Invest in the Equity markets; you could easily find lot of Large Cap stocks for cheap valuations. Global and Emerging markets also has a lot to offer.

US recessions typically don’t pan out for long, thanks to the administration and the regulatory authorities behind this economy. Wishing you good days ahead….

ICS can help you and your business in these times. ICS, Inc (www.mybizfiler.com) offers a wide range of services typically offered by a Big 5 Accounting firm and a CPA firm in the U.S. ICS offers Incorporation, Book Keeping, Payroll Services, HR & Business Consulting etc.  Contact ICS today at    203 437 4083   , e-mail – sales@mybizfiler.com, or by accessing 24/7 chat page on www.mybizfiler.com.

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The contents of this post are personal statements or opinions expressed by Co-Founder, President & CEO, ICS Inc. They must not be construed as financial, investment or taxation advice.

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