I haven’t written much about the current global economic situation, but I’d like to now.
As I’m sure you know, we’ve seen unprecedented actions on Wall Street in the past few weeks. These turbulent times can be a bit scary, especially for people who might lose their homes or people close to retirement.
I’m betting that we have a long ways to go before the economy is back to normal and prosperous once again. It took a while for things to get in a mess, and it’s going to take awhile to clean up.
Still, I’m hopeful for the future, and I think we can all end up better than we started off.
— People are spending less. Sure, that’s not a great thing for the day-to-day economy, but it’s great for individual’s bank accounts. When people spend less, use cash, and save more, their personal financial situation will likely improve.
— Speculators claim that Christmas shopping will be down this year. That’s fine by me! Again, it will immediately hurt retailers, which can have a trickle-down effect, but Christmas is not about toys, gadgets, new clothes, decorations, or presents. We’re supposed to be celebrating Jesus’ birth. Maybe we can all focus more on that this year instead of how some little kids might not get a Wii or a Tickle Me Elmo or whatever the “hot item” would have been this year.
— It’s harder to get loans. In the short-term, that means car dealerships and retailers will see a drop in sales. Maybe their losses will be so significant that they’ll have to lay off workers and cut production. When that happens, it’s hard on many people obviously.
But if people can’t get loans, maybe it’s because they’re trying to borrow more than they can afford. Maybe they aren’t so deserving of credit to begin with. Maybe that person who needs a new car will find a cheaper used model, pay cash for a car, or use public transportation. Not as fun as driving a brand new flashy car, but hey, it’s better to live within your means anyway.
— People are eating out less. If they’re eating meals at home, then they’re saving money on gas to get to the restaurant, money for the food, and tip. Their meals might be healthier, and they’re likely cheaper than a restaurant would have charged. Yes, this hurts the wait staff, other restaurant employees, and certain food distributors. But sorry, if I don’t have any money to go out to eat this week, I’m not going to put it on my credit card to save the restaurant economy.
— More people are starting to see the value of getting out of debt. Credit card debt really is the pits. I’ve been there, and I don’t wanna go back. If more folks start to save up for purchases and pay off their credit cards for good, that’s a great thing for the average person and a lousy thing for credit card companies.
Maybe a few years from now, this whole thing will have blown over and people will be back to their old ways. I hope not. I hope we can all learn from this situation — policy makers and average people alike.
If we’ve learned that hey, you really do need to have a “rainy day fund,” get out of debt and stay out of debt, not drive a car you can’t afford and certainly not buy a house beyond your reach, then I think this whole slump would have been worth it. There will be another bubble bursting in the future. There will be more recessions in our lifetimes. We can’t personally control the economy, but we do have a bit more say in our financial situation.
- The upside of an economic downturn at Wise Bread
- Could frugality be bad for the economy? and An argument for frugality in the face of hard economic times at Living Well on Less
- Why a recession is good for us at Northern Cheapskate
- How to survive (and thrive) in a recession at Smart Spending
- Finding one bright spot on Main Street in Time magazine. Yay, Pittsburgh