Freedom ~ Abundance Health ~ Happiness

I came across this post on Peter’s blog http://petercatalano.info from his tweet at http://Twitter.com/OnlineLeads.

And because opinions are like, er…bellybuttons (we all got one), I thought I’d add my $.02.

Peter wrote:

In February I stated that the economy will be back on its feet in December. Furthermore, in December the media will state officially that the recession officially ended in September! At the time, I was one of the few, if not the only one, making this bold statement. After all, the market was down to it’s lowest point we’ve seen in years and the media has been proclaiming doom and gloom for another 2-5 years!

Fast forward to July 30th, 2009 and I am reading the headlines on the Austin American Statesman “Fed survey finds tentative signs that the recession is ending.” Since that article, more and more articles have illustrated the possibility that the recession is lifting. I proclaim the recession will lift in September and not be official until December. This brings up two very important items to share. This article will share the first and I will post a second article to share another point of view.

Let’s start with the recession and unemployment. Last week I had lunch with a couple of business owners. I made my statement about the recession and was asked by my friend how I could say that considering the high unemployment. The answer is simple. Consumer confidence in the markets is driven by profitability. Employees , in most companies, create the most expense. So reduction of expenses, in this case employees, creates profitability. As earnings are reported in the next few months, we will see companies showing signs of profitability. In a short time, the inventories of companies will diminish causing a need to increase manufacturing. Increased manufacturing translates into the need for employees. And the cycle begins again!

This is a cycle proven over and over again. You may not like the impact of an economic downturn and you may sympathize with those who have suffered great financial loss. And yet it is a cycle and it will repeat. There are few questions for you to consider:

1. What will you put into place NOW to take advantage of the economic turn around?
2. What will you do to create multi income streams?
3. How will you prepare yourself for the next cycle?

To your Success

Peter Catalano

Bold statement indeed. Whether prescient however, only time will tell. For the millions of Americans suffering unemployment, underemployment and otherwise precarious finances, I hope he is right.

I have a somewhat different view:

I must begin by stating that I am not an economist. That said, in my humble opinion we are far from through this economic downturn. At best this economy will struggle for at least another year and I think that is optimistic.

The slide in housing prices has not yet stabilized. There will continue to be millions of Americans losing their homes in foreclosure.

Liquidity has not yet returned to the commercial lending market and American small businesses, the backbone of our economy, are starving for cash. Companies will look for ways to run lean and that means fewer employees doing more work.

Consumers are dangerously over-leveraged and the U.S. Government is frighteningly over-leveraged and is printing money to meet its current obligations and expand its wasteful spending at an alarming rate. This fact will cause certain and predictable outcomes.

As businesses and consumers must compete with the federal government for debt capital, access to private sector capital will become more difficult and its cost will increase. Expect interest rates to rise from current levels. This will impact cash available for businesses to expand and create new jobs.

Exacerbating the problem is the looming, likely severe upturn in inflation. As more and more dollars are printed to fuel out-of-control government spending, their value surely will diminish. This will have the effect of goods and service costing more inflated dollars.

There is also a very real threat of continued and perhaps accelerating U.S. Dollar weakness. What this means is the purchasing power of the U.S. Dollar relative to other world currencies will continue to decrease. The practical implication of this is that every product or service produced abroad will become more expensive to those of us who earn and hold U.S. Dollars. This will affect the cost of everything from the Honda Accord to the Bayer aspirin.

As much as I would love to have reason to share your optimism for the macro-economy my friend, I see storm clouds out into the distance.

Now, what we do agree upon is the fact that each of us has control of our own micro-economy and we can take proactive measures to prosper ourselves.

We must choose to exercise that control.

Watch this short film to shift your paradigm on what is failure.