David Segal wrote in the New York Times on Saturday of how the recession (“our economy went kerflooey”) has skewered peoples’ notions of what’s possible for their futures.  Now replacing Plan B (retiring to the south, a vacation home, early retirement, etc.)  is “the new Plan B:” making best with what’s left, the “deal you cut with a fate you might be unable to avoid.”

Segal points out that the number of us who are actually living the new Plan B is low, but that thoughts about the new B have now become a part of our interior monologue.   He goes on to cite examples from several people he’s interviewed recently.

A sobering read, you might nevertheless want to check it out if you’re contemplating a redefinition of the next stage of your life; find it here:  What’s Your New Plan B?

In November I posted a number of predictions for the 2009-2010 economy.  Having listened during the last couple of weeks to several economists present their views on 2009 and some thoughts about 2010, I thought I’d revisit the subject.

By and large I stand by the predictions offered in the earlier piece, but continue to be a bit more bearish; a few specifics:

• Unemployment:  in November I suggested that unemployment will reach 7.7% in 2009; I now feel it will hit 8% this year
• GDP: I earlier suggested that GDP growth would be -1% in ’09; my revised estimate puts it at -2% this year, rebounding somewhat in 2010 (~+1.5% growth)  Even Kiplinger, usually bullish, predicts GDP growth in 2009 to be at -1.8%
• Housing Starts: In November I suggested that starts would bottom out in the “high 600K” range sometime in ’09; I now feel it will be closer to 550K on an annualized basis
• Existing Home Sales: November:  5M; Now: 4.5M
• Crude/Inflation/CPI: no change
• NEW – the Stock Market: Hits bottom in Q3 of 2009

Edit: To this last point, MarketWatch happened to publish an article this morning on when the market will bottom out:  Searching for the Market Bottom.  The article includes a sidebar poll on when readers believe this will occur.  (as of 7:46AM Eastern time, 2/3/09, the 2nd half of the year held a slight lead.)

One of the economists I was lucky enough to listen to last week was Alan Beaulieu of the Institute for Trend Research.  I saw Alan speak at a symposium in August of 2006 and he was predicting a housing bubble burst and a significant recession to take place in 2007-2008; certainly his timing was a bit off, but the substance of his remarks was scarily on point.

As a result, I paid attention when he said last week that investment accounts, if left invested as they were prior to the recession, would take 10 years to reach their October 2007 levels!

Tomorrow I’ll offer a few suggestions for how to invest as the economy and market begin to recover.

Oh – and if all this seems too dire for you, check out this post from The Simple Dollar which offers a rosier picture of the future:  How I Look at Economic News – Beyond the Talking Heads

Edit: a friend sent me a link to this 2007 video in which Peter Schiff is nearly laughed off the air for suggesting that the housing bubble would burst:

Finally, the Legal department implores me to mention:  the views and predictions offered here are my own;  I am not an economist.  The opinions expressed here are offered for your entertainment  …and so on. [superemotions file="icon_wink.gif" title="Wink"]

Care to argue with my predictions?  Please comment!

Courtesy of PC World (via MSN) here’s a good rundown on 9 sites to help you manage through the recession…  CLICK HERE for the full article.

This article appeared on the Newsweek blog back in January of this year, well before the financial collapse – but its basic points are spot on.

(Forgive me for ending the week on this note, but as they say, “It is what it is.”)

Regular readers know that I monitor a number of industry and economic indices and indicators each month, as well as subscribe to reports from several economists and industry analysts.  A fairly clear consensus has emerged over the last 4-6 weeks as to how the economy will perform from both a domestic and global standpoint during the next 12-18 months…

In this post I’ll try to capture my sense of what’s in store for us, and will keep the analysis at the 40,000 foot level.

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Unemployment: As recently as the spring of 2007 the U.S. unemployment level was at 4.5%; today it’s at 6.5%.  A growing chorus of forecasters indicates it could go as high as 9% during the next 24 months.  I’ll stick with the forecast from MAPI:  2009: 7.7%; 2010: 8.3%; 2011: 7.8%.  The Manufacturer’s Alliance is suggesting it will be no lower than 6.5% in 2013!

GDP: GDP growth in 2008 will likely be somewhere in the neighborhood of 1½%. (Q4 is likely to be horrid, by the way.)  Kiplinger has consistently retreated from rosier forecasts over the last 6 months, and is now forecasting GDP growth of 0% for 2009.  I don’t believe that’s realistic given the financial sector collapse,  consumer confidence being at historically low levels and the fact that the housing market continues to seek bottom.  Other forecasters have 2009 at ~-1%, and I think it will be at least that negative. GDP should rebound somewhat in 2010, perhaps growing at 1 to 1½%

Housing Starts: The collapse of the housing market has so much to do with our current economic malaise. A few years ago starts numbered over 2 million on an annualized basis.  As of September of this year, starts were at an annualized rate of 817K; next year starts should bottom out in the high 600K range - somewhere in the first half of the year – and will rebound to the 900K to 1M range in 2010.

Existing Home Sales: ~5.4M in 2008; ~5M in 2009.  Won’t return to “normal” levels of ~6M until 2011.

Imported Crude price/bbl: Forecasts are all over the place on crude. I’ve seen 2009 forecasts as low as $55 per barrel and as high as $85.  I believe crude will average somewhere in the range of $65 to $70 per barrel for 2009, and will increase to $75 to $80 per barrel in 2010. A positive! Gas should be reasonably inexpensive for the next couple of years (the EIA is projecting the average price per gal of gas @ $2.37 for 2009; Kiplinger, $2.25)

Inflation: From Kiplinger:

“In addition to energy, prices of major items are declining, including apparel, new and used cars, airline tickets and hotels. But there are increases: in rents, education costs and prices of medical services.”

The CPI will likely grow by about 1% – 1.5% next year.

In short:  we are in for a protracted recession.

What Can I Do??

I’ve written about what the average person can do to survive a recession – click here for a recent post – and will simply touch upon a few basic strategies here:

• Cut ALL unnecessary spending. If you don’t need it, don’t buy it. If you think you need it, give it a 24 hour – or longer – sanity check
• Fund your emergency fund as though your life depends upon it
• Hone your job skills and add value to your organization
• Network like crazy
• Develop alternate sources of income – a second job, a blog, sell stuff on eBay, etc.
• Don’t panic. This too will pass…  it’s going to take some time, however

Hang in there. And if you have strategies you’ve put in motion during the economic slowdown, please share them by commenting! Thanks for taking the time to stop by and read this; I appreciate it!

Image:  Face It @ Flickr