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Recession or not?

We all hear about recession and the sub-prime mortgage mess etc, etc...

But what should you believe? Whom should you trust when it comes to any of these topics? Well, it depends.

After-all, we really don't know until we are in the middle of it. That's where common sense kicks in. There are several indicators that can help you assess the situation at any given time. You will never be 100% accurate, but you will have a pretty good idea. Here are some of the "red flags" to consider before making an educated guess:

1. Unemployment rate (in a recession it can surpass 6%)

2. New home sales (normal is approx. 1.6 million/year)

3. Repos and Forcloseures

4. Flippers and Speculators (renting vs. selling remodeled homes)

5. Automobile market (discounts, rebated, 0% financing etc)

6. Number of building permits issued in an area

7. Federal Reserve Bank prime interest rate

8. Inflation factors (ex. Consumer Price Index (CPI)

9. Composite Leading Economic Indicator (LEI)

10. Common Sense

Non of the above is 100% accurate by itself, but a combination of all will give you a pretty good idea.

I personally refuse to believe everything that is said on the news, because TV news is selling advertising space not actual valuable information. So, really the only way to know is to research and spend some time going to the sources and drawing a reasonable, realistic conclusion.

A recession is considered when the Gross Domestic Product (GDP) is down two quarters (6 months) in a row, which means waiting for that to be officially announced, you are likely to find yourself in the midst of a deep recession (7 months into it - including a month or so to gather and report all data). So, in order to stay ahead of the competition and continue to run a profitable business, look at the big picture and make adjustments as you go, instead of waiting for the "RECESSION" to be officially announced.

Posted by Mina V Garrey - Commercial Capital Properties, Los Angeles, CA on 03/11/2008 01:40 PM

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