Recession Straight Ahead?

ballsI’m no economist. And I don’t play one on TV either.

So please take my economic prediction with a grain of salt. But it surely smells to me like we are moving into a recession. Not the almost fall off the cliff Great Recession in late 2008/2009 (I pray not). But rather your garden variety economic slowdown that happens every few years when the economy stalls, the markets slide, and belts are tightened by companies and individuals alike.

Why do I say this? Again my basic analysis tells me:

1. The stock market is weak. Don’t need to be a genius to see that. Excuse me if I have little faith in the integrity of our financial institutions. (PS Go see The Big Short for a reminder—good movie)

2. China’s economy has hit the skids. China is big–in size, people and economic impact. Again no genius here.

3. Oil prices have plummeted. Good news at the pump, but the flip side is that the major oil companies prop up the economy, so when they catch a cold….

So what’s the indicated action from a business and personal perspective?

1. Tighten your belt. This is actually good advice in good times and bad. Frugality in life is a trait I admire.

2. On a personal level, eliminate unnecessary expenses. Increase your cash as much as you can and have that “rainy day” fund full.

3. If you have a good job, keep it. (Duh). Show extra value to demonstrate that you are among the essential folk if layoffs are around the corner.

4. If you feel vulnerable at your current job, leave, and find a better one–do it now. Your vulnerability could turn into unemployment in a downturn. If your industry gets hit hard in a recession, maybe it’s time to find a new one in any event.

5. Don’t panic. If you’re frugal and don’t overspend your means, then even if a recession is ahead you’ll come through to the other side unscathed.

A basic concept which I strongly believe is simply…Spend Below Your Means. “Your means” varies widely among all of us. But you get my gist. Don’t spend to the max leaving little margin for the unexpected.

Expect a recession…and if it doesn’t come, you can say “what does Strum know anyhow”. Indeed Strum doesn’t know that much about economics. But he knows enough about real life to see things with clarity.

More Strumings

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