|Is your outlook positive or negative about the economy?||AllisonHayes|
Jun 6, 2002 5:07 PM
|How many of you are in fear of losing your job? Or, have already lost one and are in the market for a new one? |
A friend was laid off 7 months ago and is now terribly depressed. He has gone from optimistic about finding a new job, to eager about pursuing new opportunities, to concerned about lack of finding opportunities to fearful about being able to support his family, to being so depressed that all he does now is want to sleep.
This guy is a smart, capable consultant with lots of technical skills. In addition he was a former CFO. He is willing to move anywhere. He has had to put his house up for sale, he can no longer afford to pay for his daughter's college education. His wife's salary is not enough to cover expenses. They are now rethinking their whole lifestyle.
I am seeing this story being played out in different forms all over, with new announcements of cutbacks, layoffs, downsizing and hiring freezes. My company is going through another reorg and this could mean it for me within a month.
It looks like the economy will get a lot worse before things improve. I feel I can make it for as much as a year by cutting back to essentials. I am going to put off any major purchases indefinitely.
What are you doing, if anything, to prepare for what looks like a pretty long and rough road ahead? Is your outlook positive or negative?
|I'm riding my bike more, hoping the economy gets a little worse.||Mike P|
Jun 7, 2002 3:46 AM
|I figure if the economy goes down a little more the house market here will shift to a buyers market. Right now it's a fairly strong sellers market here; can't understand why.
Jobwise, I feel pretty safe were I am but that is not true for a lot of folks here in Chattanooga, TN. A few major employers have shut down completely and several more have had massive layoffs.
|re: Is your outlook positive or negative about the economy?||netso|
Jun 7, 2002 4:49 AM
|Not worried about losing my job, however since I am now in retirement mode, seeing the stock market go down is scary.
I have lost about 35% of my capital during the past year, forcing my wife and me to rethink our budget. We have really cut down.
|Thoughts on the American economy,||TJeanloz|
Jun 7, 2002 5:18 AM
|My view on the current economic state is that we've got a bit of a hangover, and enough that a couple of aspirin won't fix it.
Really, part of the problem is that we're viewing things through the rose-colored lenses of 1996-2000, when economic expansion seemed limitless, people named their salaries, and stock market valuations were out of control. Every economist knew that that boom was unhealthy in the long run, but the repercussions for speaking the truth about the dot.boom were too great for most to take, and those who said it were laughed at. Remember the people who thought Warren Buffet had been left behind? Look who's laughing now. We're still stuck in this trap of asking "When's the stock market going to rebound"? Well, at least I hope, we don't see it rebound until actual growth can justify it.
A lot of people my parents' age say asinine things like "I had $1 million in my retirement account, and I've lost half of it." True, but they had $300,000 in 1997, it was artificially inflated to $1 million, and created expectations out of line with reality.
So my thinking can be summed up a few ways:
1. The economy isn't in terrible shape when measured against a decent control, put against the 1990's, it looks terrible, but line it up with truely bad times (1970's, 1982, 1930) and you see that things aren't so bad.
2. Things aren't likely to get worse. They just aren't likely to get better anytime soon. The economy, and the stock market, are in pretty comfortable spots right now. It was very easy for people to raise expectations of their worth in the dot.boom, but salaries were ABOVE their proper level, and probably won't go back to those levels. The American consumer needs to learn to live within their means.
3. History has proven that the only prudent policy, in all economic times, is to wait it out, plan for slow, long term growth, and save money for the rainy days.
|Thoughts on the American economy,||netso|
Jun 7, 2002 7:04 AM
|Still it is hard to accept. For instance, when I sold my company in 1998 the stock was worth $35/share. It went to $8.94. This scared the hell out of me!|
|Thoughts on the American economy,||netso|
Jun 7, 2002 7:05 AM
|Thoughts on the American economy,||netso|
Jun 7, 2002 7:08 AM
|It still scares the hell out of me. When I sold my company I received stock valued at $35.00/share. I cannot sell until I turn 591/2. It has gone to $8.94. This was one of my main retirement funds.|
|It's sad but true,||TJeanloz|
Jun 7, 2002 7:17 AM
|I'm not passing judgement, but an analyst with balls should have told you that (a) the Company that transferred stock to you was not worth $35/share, or (b) the valuation that you received for your company was also too high, and that there might be a correction factor.
I'm not saying that I have balls, as a petty investment banker myself, I'm inclined to get as much valuation as I can, even if it is 'falsely' high. It's actually amusing in the current climate when a company brings an offer of stock to the table. Five years ago, they used to say "we'll give you 100,000 shares at $50, and in ten years when you can sell it, it will be worth $1,000/share. That's better than $1 million in cash isn't it?" Nowadays, we take the cash, and laugh at the guys offering stock.
I'm not trying to be hard on you or anybody, but it is vindicating to know that it takes more than a trained monkey to do my job.
|Short term positive, but ultimately...||cory|
Jun 7, 2002 7:30 AM
|I'm with TJeanloz, with one addition. The economy is going to cycle--always has, and there's no reason to think it will stop. The boom of the '90s was largely bogus. Depending on how you count, I "lost" about 40 percent of my assets...but they weren't real assets anyway, just inflated figures from a flukish period of expansion. I'm still ahead of where I would have been if that hadn't occurred.
The question that occurs to me, though--warning, tree-hugger sympathy coming--is how long a culture based on consumption and unending growth can survive. At some point--whether it's Tuesday or in 10,000 years--the resources have to start running out. I'd feel better if I thought anyone took that seriously.
Jun 7, 2002 7:47 AM
|A lot of this depends upon your perspective. If you are in an area with a very diverse economy, like ag, light industrial, tourism, etc., the swings tend to be mild, with the upper peaks and lower valleys you get in a "specialized" economy, like Detroit or Silicon Valley.
That being the case, things can go wild in other areas and everyone locally is thinking, "what's the big deal? Nothing has changed here." If you are in Cape Girardeau, Missouri, or even Fresno, California, two of my home towns, not a whole lot changes very quickly. Things tend to simply grow at a steady rate.
I think a lot of the perception of economy is self-fulfilling prophesy. If we have leadership the engenders hopefullness and confidence, it seems like things tend to get better. People hire, invest and take risks, and it feeds itself. If all you hear is gloom and doom, people get scared and don't do the things that expand the economy.
It seems the economy is fairly resilient now. Dips in one area, either geographic or economic, don't necessarily take down other areas, at least not dramatically. Otherwise, based upon reports from 1 1/2 years ago, you'd think we'd be in a depression by now. But, as may pointed out, much of what we believed was "good" economy prior to that was all play money, anyway. You never really had that Cisco stock at $115 (unless you bought at that price -- ouch!).
There will always be layoffs and downsizing in certain areas. No way around that. For those people, the economy is in a depression. Likely there are other opportunities out there, though (when life gives you lemons...). I'd love to be in any industry related to defense or security these days. A local company in Fresno, Pelco, makes security cameras and systems that do the facial recognition. I'd say they will do pretty well in the next few years.
There will always be ups and downs. As long as the entreprenurial spirit, work ethic, and productivity of people exist, though, over all things will be fine.
|still have a job, but you never know||ColnagoFE|
Jun 7, 2002 8:52 AM
|have made it through 5 rounds of layoffs now. could be any day. your buddy ought to see someone if he's that depressed. there are things that they can do to help him through this. better to do it now before he gets any worse.|
|Adding to TJ's and Cory's comments...||Jon Billheimer|
Jun 7, 2002 6:19 PM
|The future growth of the American economy is also tied closely to demographics. As the baby boomers move into retirement there is going to be an inevitable stagnation of consumer spending. It is the consumer which has fuelled the incredible bull markets of the late 80s and 90s. So expect, long term, annual growth rates to dip somewhat below historical averages, probably for about twenty years or so.
If you want a short to medium term portent, simply look at the average price earnings ratios of the major stock indexes. They are still inflated by historical standards, which to me indicates that near term growth will be flat. However, growth also is sectoral. So as Doug points out some areas will do better than others.
Never fear, if things get too bad, Bush will conjure up a war somewhere. Remember Margaret Thatcher?
Jun 12, 2002 12:47 PM
|As a small business owner, my outlook is certainly negative. Wallets are tight and rates are low. I specifically avoided getting swept into the hype of late 90s with my business, but it is still hard.
In fact, in the next 48 hours I have to decide which employee to lay off and I absolutely hate having to do things like that. There are lots of talented and intelligent people losing their jobs these days. If you have steady employment be thankful. It is a terrible stress to worry about the solidity of your employment, especially when you own the company.