Are You Ready For Tough Times?
Those with a financial education keep fighting
Things are not looking good for the U.S. economy. This means that things are not looking good for most people’s budgets and portfolios. Things are especially not looking good for the employees that make up the middle class. But the real question is, “How are things looking for you?”
Things are not looking good for jobs.
According to The Wall Street Journal, “U.S. employers added 80,000 jobs in June, barely better than the 77,000 they added in May. The monthly report from the Labor Department provided the clearest evidence yet that job growth has slowed sharply from earlier this year. The U.S. gained just 225,000 jobs in the past three months combined, making it the weakest quarter of job growth since the labor market began to recover in 2010. The unemployment rate remained stuck at 8.2%.”
In addition to the official unemployment rate of 8.2%, the number of people who are underemployed, such as working a part-time job because they can’t find a fulltime job, rose slightly to 14.9%, and 28.5% of all U.S. workers have been out a job at some point in the last year—that’s about 3.8 million people.
Things are not looking good for economic growth.
The employment numbers are simply an indication of a broader slowdown in the U.S. economy. “Government spending is falling, business investment—which snapped back after a sharp drop in the recession—has leveled off, and manufacturing is slowing amid weaker demand from overseas. Meanwhile, high unemployment, weak income growth and a still-moribund housing market have given consumers little ability to step up their spending,” reports The Wall Street Journal.
Perhaps most troubling, the manufacturing sector in the U.S., a key-driver in the little growth the economy did see over the last year, is now tanking. It shrank for the first time since July of 2009, falling at the fastest rate since post-9/11.
Things are not looking good for Europe’s debt crisis—and by extension, the world.
“The report [on the U.S. manufacturing sector] is the strongest evidence yet that Europe’s troubles and slowing growth in China are hurting American factories, one of the biggest drivers of the U.S. recovery,” writes Neil Shah.
“This is probably the most definitive piece of proof that the European and global economic downturn is impacting the U.S. economy,” says Michael Feroli, a J.P. Morgan economist. “We’re starting to feel the infection now.”
But wasn’t the news media just telling us how Europe had reached “breakthrough” on dealing with its debt crisis?
It appears the reports were a bit premature. The reforms agreed upon by the Euro-zone will be slow to roll out and European countries will have to guarantee loans their banks receive from the bailout fund. The world is already reacting to this news. Last week, Spain’s 10-year government bond hit near record highs at 6.97%. The last thing the country needs is higher borrowing costs, but that appears to be what it’s getting.
A good question
So, what’s the point of all this?
Times are tough—and they’ll get tougher. A good question is, “Are you ready for tough times?”
People respond differently to tough times. Some take flight, running away from danger. This could mean avoiding anything that seems “risky,” putting your money in savings or under a mattress, and cutting your spending. It’s a solution, but not a very good one.
Others live in ignorance. These people sit on the couch after work, eat fatty foods, and watch television—but not the news, just entertaining shows. They do whatever they can to ignore the reality of their situation. Their favorite phrase is, “Ignorance is bliss.”
Intelligent people fight. They invest in their financial education. They understand that saving money is riskier than investing it in assets that cash flow. They know that building assets is the only way to wealth, and they pay attention to what is going on in the world so that they can make intelligent, financial decisions. These types of people flourish in tough times.
What type of person are you? How are you responding to these tough times? Are you taking flight, ignoring them, or fighting?
Today, I encourage you to keep fighting. This is a time of great opportunity for those who pay attention, increase their financial knowledge through financial education, and engage our economic uncertainty with the certainty that a high financial IQ affords.
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