Economy Outlook

We are all seeing mixed messages coming from the news media regarding where we are at in the recovery and how the US is ending the century.  Realize there is a lot of sensationalism out there trying to drive up reader ship.

As an example is a recent article from MSNBC where they stated:

“The domestic economy since 2000 has been anything but stagnant. But as the decade ends, consumers and workers, investors and industries find themselves with little, if anything, to show for it.”

Later the article they followed with the following observation regarding median income to support their claims.

“U.S. families earn less now then they did when the decade began. Median family income fell to $61,521 in 2008 from $63,099 in 2000, according to the most recent inflation-adjusted figures from the Census Bureau.”

Now, this may be a glum assessment and true to a certain extent.  However the author failed to bring out a couple of points.  First, 2000 was near the peak of the .com bubble. (check out retail trends) It seems like ancient history and most of us have forgotten it by now, but this was really driving the economy at the time.  So this assesment takes into account an inflated number on the front end and compares it to a deflated number for 2009 which at best is in the recovery phase from the Banking buble.  Sustained recoveries tend to drag out over years while the initial plunge tends to be quick, so you need to take all this into account when looking at the economy.

Moving forward it is uncertain but looking at recession history gives us some hope.  With luck and assuming a continued drop off of bad news from our banks we can expect a slow but steady climb in 2010 bringing us back in line with traditional steady growth.

Now at the end of the day, what happens in Wall Street does trickle down to one extent or another to your day to day life.  Your home is traditionally your safest place to invest in, however if you’re looking to sell in the next year or so, you really need to take into account the depressed prices and your situation when considering what to fix or replace in your home.  As an example, if you need your furnace repaired you might want to consider upgrading if you can swing it or just stick with fixing it.

If you have more time on your hands then you can be a little more flexible in what you change around the house but use the economy as an excuse to get more basic and focus on the fundamentals.