Sunday, January 25, 2009

recession reflections

By all popular accounts it now seems as though we are well into a recession in North America. The doom and gloom in the media is extremely evident, and now terms like 'uncertainty', 'recession', and 'tough economic times' have completed the long journey from CNBC to Subway commercials. Grade 10 girls are reflecting on the economic downturn in discussion around their lockers between classes. It is official, the sentiment is bad and times are indeed tough.

Despite the decisiveness of most on this issue though, it is an interesting discussion to have with friends, colleagues, and relatives. How has this all affected you?

Losing your job is very unfortunate, and for those who have been affected I wish them luck and success in the future. I've seen countless examples of where the recession is really hurting on the news; but where is it hurting locally and in the lives of those around me? Well...
  • Of all the folks that I know, I am aware of one person who has been laid off recently
  • Personally, my investments have been hammered beyond belief, and I'm sure I'm not alone on this

On the other hand:

  • I know a few small business owners who are reporting business as usual
  • In minus fifteen degree weather I still can't get a parking spot at local malls
  • An 'edible arrangements' business just opened up in my area
  • Real estate still seems to be on the expensive side

Right now I do feel like there is a chasm between what appears to be going on in the world and what is actually happening locally and to those that I know personally. Is anyone noticing the same thing?


Anonymous said...

I believe this so called recession is mainly controlled by the media.

Slight downturn in stock market -> media reports market crash -> people panic and sell stocks -> media reports on further losses -> more panic....

Essentially any bad news is amplified over and over. Eventually this does lead to actual problems like job loss, because people become afraid to spend their money. However, most see absolutely no sign of anything happening, because things continue to run as they would normally.

Anonymous said...

economy isn't that bad. we're not in a depression but we're certainly not in a boom right now neither!

Janette said...

One has to remember that half of the 30's depression was the failure of farms.
Here in Kansas the turmoil is minimum. The farmers are still farming and the soldiers at the nearby base are well employed. Other than that the minimum wages jobs still exist. We did have one (of our seven) national chain stores go under:<( I am looking for a car- and the prices sure seem to be the same.
My sister in Phoenix and sister in law in Las Vegas are seeing the real fruits of recession. Many of their friends (mid to higher level) are being laid off. they are being replaced with lower paid newbee people (as one can tell if you call an US bank for anything these days- no one has a clue). Real Estate is tanking. My sister in law's house has lost 1/2 or more of its value (down from $500,000 to 210,000 in the neighborhood of cookie cutter houses- and the 210,000 are not selling). They have lots of "close out" places to purchase things.
The up side is that my kids are savers and both plan to buy a house in the next 12 months. They should do very well- even in Hawaii and Washington DC.
I got out of the market early. Since we are pretty well retired, no taking big chances. I have crept back in lately...but think sitting the sidelines is fine for people our age.
I continue to enjoy your blog. It keeps me fresh on what the next generation is doing with finance.

----t h rive---- said...

Business 'almost' as usual here on Vancouver Island. The local gov't sure is acting poorer, and larger industries are taking it on the chin. I work within the resource/forest industry, but luckily my area is doing well, that being Aboriginal relations and development.

People are going out less (especially in the under 30 age-group), but I think that's a sign of people smartening up. Less irrational spending and owning everything within reach. Real estate on the decline: is going to be good for us in the next four years.

I think the 'smaller' places in Canada will feel the hurt over time. Bigshots in Toronto, for example, will be feeling much like the American big city - whatever that might be.

----t h rive---- said...

...oh ya, as far as 'investing goes' I've toned it way down. The only investing I'm doing is the basic RSP installations in conservative funds - and I've lessened my contributions 45% because of budget issues. And why keep giving bucks to my bank?

Other than that I've been adding to my trade account and trading lightly. That may be the way of the future.

Traciatim said...

Someone beat me to the notion that the media is the problem, "The doom and gloom in the media is extremely evident" . . . if they weren't trumpeting it from the mountain top, would anyone even notice?

Anonymous said...

These things always take a while to ripple through the economy. We're just getting started. Unemployment always spikes in the months after a recession is officially over by the numbers.

Real estate in Canada is only starting to hit its rough patch in the past couple of months. Listings have soared, sales have dropped off a cliff and prices will soon follow. 2009 will most certainly be an ugly, ugly year with us likely not even managing to get ourselves out of recession. It takes a while for the cracks to show and start splitting, I expect that by summer we'll all know several people who are newly unemployed and at least a couple who are in serious risk of defaulting on their mortgages.

I've sold my house, am renting for far less than a mortgage would cost me without the risk of losing my equity, and have invested heavily in to precious metals and managed to make a small positive return on my investment portfolio in 2008.

Finance Matters said...

I have friends that work at Dofasco and are being force to take 2 days of holidays per month right now. Another guy I play hockey with has been laid off and says 40 of 44 guys on the floor of the factory he works in are being laid off. My sister-in-law works at Zellers and they have cut back on hours. The hospital system in the City is letting 250 people go, not sure if it's recession related but I'm sure it won't help the local economy.

Anonymous said...

I'm in the worst sector(second worse maybe autos are number one) forestry and it's very tough for us(and has been since the middle of 2007) but outside of my job, it just doesn't seem that bad.

The malls are full here and everything seems normal. No one I know has lost their job and they say business as usual.

They keep saying it's worse than the 80s but it sure doesn't seem so. The depression talk is funny, no one has a clue what 25% unemployment looks like because none of us were around then.

telly said...

I agree wholly with Anonymous's comment: "These things always take a while to ripple through the economy. We're just getting started....I expect that by summer we'll all know several people who are newly unemployed and at least a couple who are in serious risk of defaulting on their mortgages."

If you live in Canada (outside of Windsor / Essex anyway) you haven't seen anything yet. What is going on in the US is just now trickling up North and may take awhile before it hits you or someone you know.

Windsor tends to lead the economic trend in Ontario (we saw the upswing before most and have seen the downswing 1st too). Despite living in Windsor, 6 months ago I didn't know anyone that was laid off / unemployed. Then the sh!t hit the fan in Novemeber. In Nov. I was temporarily laid off (6 weeks) from my job as an engineering professional (not line worker as most have chalked the unemployment #'s to). My sister, also an engineer has also been temp. laid off. In fact, about 80% of my friends or family have either been laid off or is very afriad they will be next - and many are NOT in the automotive industry. Believe it or not, I even know a Physician (pathologist) that has been laid off recently. I hope in six months many of you will not be saying the same things, but I'm afraid it's very likely.

Keeping our expenses low enough to live off one paycheque was our saving grace but families with one income are being hit really hard. The stuff you're hearing on CNBC & even Subway commercials are directed at Americans. While most Canadians haven't seen this so-called recession yet, Americans have been living under a dark cloud for a few months at least, and it doens't look to get better just yet.

Saver Queen said...

in some ways the media seems to make it appear worse than it is, but then again things are really starting to hit home. My partner's company caved and he had to find a new job. Interest rates for our savings have fallen, and our favourite game store is closing at the end of the month. The kind of things you hear on blogs - people losing their homes, not being able to pay the bills, losing their jobs, etc, also drives home just how much people are being affected. I agree with telly that after a while we will start to see a bigger impact, so we need to be prepared.

Andrew said...

I would have to agree with the original post. The media is scaring everyone to duck and cover. The media needs to make everything more dire than it actually is to make people notice.

Everyone I know, still is working and their companies are not planning any layoffs. All my neighbors are working. I've asked everyone on my two rec hockey teams and they don't anyone who has lost their job.

Yes, my portfolio value has gone down. But losses don't occur until you sell your investments. I still get the 20% top up on my kids RESPs.

I still can't get a contractor to come to my house to get a quote on a repair or an electrician to do a rewiring project. Both are too small for everyone I've called.

Two new restaurants have opened in my neighborhood, a third is reopening after renovating the interior. A cafe can't stay open because they can't find any wait staff.

MG (moneygardener) said...

Awesome comments on this post and thanks to all who participated. With the orginal post I was just really reflecting on what I am seeing vs. what I am feeling. I was not saying things are not that bad out there, and I really just wanted to take the pulse of readers.

Anonymous said...

I'd like to know where Andrew lives. My husband's rec hockey league in Detroit has been renamed "Team Unemployment". I believe the last count was 9 guys that are unemployed. I bet any of those guys would be happy to come over to Andrew's place to do some rewiring...:)

Sensei said...

Hi there!

Thanks for posting your thoughts. Undoubtely these are very tough times for a lot of people. I continue to be very optimistic about the future, but at the same time the reality is that I am watching very closely our spending, focusing on cutting debt, and seeking for new job opportunities or new ventures. Clearly from both a macro and micro economic perspective we are in a period of serious delevraging. It has become very difficult for anyone, any business to raise new money to fund operations or invest...What this means is that businesses and individuals alike are cutting on spending and focus on maintaining at a minimum breakeven and a positive cash flow.

At the same time I know a few entrepreneurs ( including myself ) who are seeking to do something about the current situation. A few things that I come across: small businesses are thinking of ways to increase future business revenues, entrepreneurs are seeking ways to create value, products and services in this environment that leverages their personal interests and skills...So there is hope and much more resilience in people than any numbers can show :)