One of my favorite musicals is The Phantom of the Opera. I've seen it on Broadway, in Spokane and in Los Angeles and it's always a powerful reminder of the phantoms we struggle with in life. This recession has been a formidable foe for many Americans as they wonder when (and how) it will end.
Recently, Federal Reserve Chairman, Ben Bernake, announced that he believes the recession is over. How do we know if this is the real deal or just a phantom? Here are some signs that the recession is really over:
- Retail Sales - With the holidays right around the corner, retailers are forever watching to overall gains and losses. Any signs that retail sales are on a sustainable upward trend (3 or more quarters of growth) are good signs for a recovery.
- Corporate Profits -- We will need to see genuine revenue growth from US Companies in order for us to say this area is picking up. We can't just look at profits that result from cost and job cuts or stimulus incentives. Real growth means real revenue.
- The Market - When investors move away from safe havens such as low yielding CDs and money market funds and they instead go back to investing in stocks--then we can be sure that confidence in the stock market has been restored.
- Jobs -- Just try to tell the guy who is unemployed, "hey good news! The recession is over!" He's still without a job--it doesn't feel like it's over for him. We've lost almost 7 million jobs since the beginning of 2008. Signs that companies are creating jobs, done firing and even looking to hire mean that their cash flow is improving and so is our economy. When there's a drop in the number of jobless claims (getting below 500,000), then we can believe we're in recovery.
Whether the recovery is real or we're still in a recession, it's important to practice the basics of good financial management: get on a budget, live a more frugal lifestyle, pay down debt, and follow the seven steps to thrive and survive during a recession. If you allow this recession to be a wake up call as to how you manage your money, then your personal recovery will last a lifetime!
America's Family Financial Expert (R)