Can You Build Wealth In A Recession? |
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| By: Bettina Romberg | ||||
The stock market is lower now in August 2010 than it was at the beginning of the year. Next month, it will be two years since the stock market crash that lost over $1 Trillion in one day. An IRA or 401(k) that invested into a mutual fund is also struggling since that loss. Countless plans for the future have been wiped out, with no sign of a recovery. Existing home sales have dropped 27% in July, which is twice as much as what was forecast. It is at the lowest level in 15 years. Economists say that this is due to foreclosures and limited job growth. The unemployment rate released by the Bureau of Labor was 9.5% in August 2010. But that number is only for those actively seeking a job. The real unemployment rate is actually closer to 22%! In the 1930's, non-farm unemployment reached 35%. We can expect this level to be reached again in the next few years. Inflation is another economic killer. Inflation has averaged 4.22% per year for the past 30 years. But with all the issues in our economy being arguably as bad as they were in the 1930's, can it remain at 4.22%? Many economists fear deflation, which is actually a decline in general price levels, caused by a reduction in the money supply. Others fear hyperinflation, which is when a country's currency inflates at a rate of 50% or more per month. Both have a disastrous effect on your wealth building plans. Consumer debt in May 2010 alone was over $2.4 Trillion. That is almost $9,000 per American. If you add this to the national debt, the unfunded liabilities such as Medicare and Social Security, each of us owe about $700,000! How are you supposed to build wealth with that kind of a burden on you? U.S. bankruptcy filings are at their highest since 2005. According to the American Bankruptcy Institute, Americans that are 55 and older are filing for bankruptcy at a faster rate than the rest of the population. From 2002 to 2007, filers aged 55 and older grew 61%. The Institute also says that bankruptcy filings will surpass 1.6 million by the end of the year. How can you stay afloat in a recession? What are you doing to protect yourself and your financial future? It is clear that with the small sample of statistics above, if you want to win in this economy, things are going to have to change. You need a new plan! |
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| Article Source: http://yourfinance.co.za | ||||
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