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What Does The Economic Recession ...
2008 - 2009 Mean To You?

It feels like an economic recession when GDP (gross domestic product) growth slows, businesses stop expanding, employment falls, unemployment rises, and housing prices decline.

Many economists believe an economic recession has already begun in the United States and I'm sure many families would agree.

According to Recession.org, "House prices are falling, and have further to fall before reaching a more sustainable level (in terms of the price-to-rent ratios as well as several other measures)."

In September 8, 2007, John H. Makin, a visiting scholar at the American Enterprise Institute stated for the Wall Street Journal: "Over the past half century, every U.S. housing downturn as sharp as the current one has translated into a U.S. recession. U.S. house prices are falling at an annual rate of nearly 4% -- an event not seen since the Great Depression -- and the downward trend is accelerating."

GDP

One definition by Wikipedia: The gross domestic product, or GDP, of a country is one of the ways of measuring the size of its economy. GDP is defined as the total market value of all final goods and services produced within a given country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value.

Stephen Roach, Chairman of Morgan Stanley Asia says: "I believe the United States is in recession. The consumption share of GDP in the U.S. is 72 percent (a record) versus 48 percent in developing Asia. The housing market has driven U.S. consumption, as well as the credit bubble. Both have now burst. Consumers will now have to save the old-fashioned way -- out of income -- and the consumption share of GDP will likely drop to the 25-year trend level of about 67 percent. That's a big shift, and we need it to correct our current account deficit. But it will mean a full-blown U.S. recession that will be longer and deeper than most think, and will have repercussions throughout the world. Japan could fall into recession. Europe will narrowly avoid it, and there will be meaningful shortfalls in growth in much of Asia."

This is not a great time to take on debt, but rather to pay off debt.

If you are hurting financially and looking for creative ways to cut your spending and manage the increased cost of living, we offer many suggestions through our Debt Action Guide.

Downsizing Transportation During An Economic Recession Or Slowdown

The cost of gasoline has become a very real pain for all of us. Here are some options to cut the cost of getting around.

Option 1. Sell The New Car and Buy Used

This approach will depend on how much is owed on the (new) car, what it is worth and the availability of quality used cars in your area. If you are determined to make this work, you can end up saving hundreds of dollars a month. Some have been able to eliminate the monthly car payment altogether and not sacrifice reliable transportation.

Option 2. Become a One Car Family

It was not that long ago that a family owned only one car and were delighted to be able to afford it. Today, 2 or 3 vehicles per household is not uncommon. With current conditions, consider returning to the one car per household. Yes it requires some sacrifice and a little inconvenience, but with some ingenuity, the savings can be significant over the year.

Option 3. Ditch the Car Completely

This may be the most painful option of all for many people, but seriously consider it before you dismiss the idea. Public transportation options vary widely with some communities having excellent service and others having no public transportation service at all. If you have a good public transportation system to rely on, you may want to consider giving up the car and pocketing the cost savings. When you calculate the potential savings of ditching the car, be sure to include not only the monthly car payment but the cost of gas, automobile insurance and maintenance as well.

Review the variety of suggestions for recession - proofing your family budget.



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Notable Quotes

quote open We must learn that competence is better than extravagance, that worth is better than wealth, that the golden calf we have worshiped has no more brains than that one of old which the Hebrews worshiped. So beware of money and of money’s worth as the supreme passion of the mind. Beware of the craving for enormous acquisition.quote close
~ Cyrus Augustus Bartol







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