Laura Rich

question-mark-chart-150Says who: Christopher Rupkey, the New York-based chief financial economist at Bank of Tokyo-Mitsubishi UFJ

“Consumers and businesses have postponed purchases for six months, the population is still growing about 1.2% per year, and if the unemployment rate is close to peaking, then growth may be firmer than expected in the second half of 2009.” [Rupkey] points to a series that in the past has proven a remarkably good indicator of business cycle troughs: weekly claims for unemployment benefits, [which] … peaked in the week of March 28. (via WSJ)

Why it might be crap: Sounds a little like the aftermath of 9/11, no? “I encourage you all to go shopping more,” George W. Bush said in 2001. Looking at the indicators themselves, there’s disagreement over when Americans will return to the malls in force, or when housing starts will improve, or even whether unemployment has bottomed out — considering how much of a surprise last month’s number was, and the fact that many are predicting the rate will move comfortably into the double-digits…

orange-fork-150As we all found out last week, the layoffs ain’t over. With the official unemployment rate now at 9.5 percent (and the actual unemployment rate coursing through the double-digits), real people are very much losing real jobs and real income. Not that anyone who plans economic policy or makes economic predictions would have cared (see Stimulus Plan, Obama Administration basis of; or take a look at the predictions in our The Recession Will End… series). Unemployment? Oh, that’s a lagging indicator. No one need pay attention to it now.

Before we all get back into the game of talking in macroeconomics about how jobs means income which means spending which means GDP which means company profits and back ’round again, we thought we’d just take a moment to consider the tangible experience of losing a job. BargainBabe.com posted an interview with a friend of hers who was among last month’s 476,000 laid-off workers…

shopping-bag-and-money 150If the recession hasn’t obliterated your non-essential spending altogether, how do you determine whether you can afford the fancier restaurant, the better suit or the weekend away? Most personal finance metrics take a monthly view on budgeting — how much money is coming in minus cost of regular monthly expenses (rent, utilities, groceries, etc.). Whatever is left over is usually recommended for savings. That’s when your own math comes in — of the amount left over, how much can you spend on the better life? And that’s between you and your conscience — or, uh, your personal budgeting philosophy.

But My Two Dollars has another view, one that while clever and perhaps effective in keeping spending fantasies in check, may also induce more guilt and a sense of burden: Tallying the number of work hours required to cover the cost of desired purchases. Here’s how it works: Say you earn about $50 per hour. If you’ve got your eye on a $38,000 BMW, that would cost you in cash, after taxes, about 1,000 hours, or 25 weeks of work ($50 x 25% taxes = $38/hour) — and that’s without laying out for food and shelter. Ouch…

computer-monitor-150For years, I covered tech. But it’s still not the same as knowing how to shop smartly for my next laptop (I can’t wean myself off of the pricier Macs) or figure out what to do about my ancient TV that pulled broadcasts out of the air via rabbit ears.

CNET has a nice package on shopping for tech on a budget that I’m finding useful and maybe you will, too. Their pieces don’t just list what to buy, but help you to understand the products and trends around them. The point is to shop smarter so that you spend your money wisely on products that will serve all your needs, and will last. Some highlights:

LaptopsTry a Netbook. If your computing needs are low, or even basic (web browsing, office doc work, and not too much need for heavy-duty graphics or HD video), Netbooks offer a great package for very little money. Mainly equipped with Intel Atom processors and running Windows XP, they’re not so great a multitasking, but they’ll do the work that most computers handled five years ago with ease…

Raising Money in Recession

by Laura Rich on June 26, 2009 in Work

dollar-sign-150It’s no surprise that it’s been tough to start and run a new business in the downturn, but Julie Brown of Inner Rewards shared her blow-by-blow experiences raising money over the last year with Collective-E. The full post is worth a read, but here are some excerpts. At this point in the piece, she has raised $765,000 from an angel who proves, throughout the tale, to be just that.

July 2008—I set out to hire a team and get started with an aggressive goal of building and launching a beta site by the end of the year. Because my investor wanted to build a company ready to be fully backed, and given an aggressive timeline to build a full blown site with content and videos, we ended up with a very high monthly burn rate (monthly expenses). I immediately set out to raise more money.

September 15th, 2008—Lehman collapses and the market is in turmoil, every single investor runs for the hills. I have now built up a full staff with 7 employees and 40 contractors and need to raise cash quickly or we will run out of money before I can even launch.

forklift-150A certain business based in North Carolina is facing tough times like everyone else. Its forklifts, once commanding strong prices in good times, haven’t seen demand decrease — just customers’ ability to pay on time. Its cash-flow strategy? Milk the mom-and-pop customers for what they have, and tighten the trade terms (the period during which the company will extend credit while customers get their own cash-flow situation together).

But, for the most part, small businesses report, suppliers aren’t putting the squeeze on their customers — everyone needs the business they can get. Usually, the vendors are putting the squeeze on the suppliers to come in at a lower price point.

Be that as it may, here’s how to manage a bullying vendor who’s pressuring you to pay now…

road in sunrise150My friend Elmira Baysali has a job. She earns a living. And she’s sometimes more nervous than I am about the economy. That’s because, as mentioned, she has a job.

Last year was a banner year for her employer, non-profit group Endeavor, which helps entrepreneurs in emerging markets. The Omidyar Network gave a $10 million matching grant, and the annual fund-raising gala produced $2.2 million. The organization planned for staff expansion and new programs. “But we weren’t able to because the reality of the economy set in,” says Elmira, who is vice president of policy and outreach. On the personal side, “I saw friends lose their jobs, travel budgets cut. I thought, what if they decided they didn’t need a communications and policy person?”

There were no layoffs at Endeavor, but cutbacks can make anyone queasy. Fund-raising has been drying up for many, many non-profits; and across industries, the economy has thrown many people’s livelihoods out the window.

“It incentivized me,” she says. “I said to myself that I had to do something so that if I lost my job, I could do something. I’d be okay.”

Lots of laid-off workers have embraced their predicaments and tried new ventures, put new projects together—we’ve profiled some of them in our Lemonade Makers series…

Small dog, big earsA publishing executive with 25 years’ experience would like to walk your dog. Although she’s still perfectly ensconced in her senior level position, she knows the industry’s still feeling shock waves from the Great Media Meltdown of 2008. Ad spending crashed 14 percent in the first part of the year, hitting record lows, and if advertisers don’t start widening their wallets soon, she may soon be counted among the growing ranks of unemployed expected to hit 10 percent of workers before the end of the year. So she may turn to dog walking.

“She’s exploring,” says her coach, Tonia Mattu at Mercury Group. “She would do anything from dog walking to opening a bed and breakfast.”

Mattu is the newest member of the Mercury Group team and part of the new direction the company was forced to take in the downturn. Earlier this year, founders Jeff Lundwall and JD Rehm saw their recruiting leads dry up…

Heart of Pennies 150Carol M. knew she had a good thing in her boyfrirend, Eric. But earlier this year, when she lost her job as a schoolteacherand faced default on her subprime loan, it showed her just how caring and committed he was.

“We recently talked about being in a relationship, and one of the benefits of being in a relationship is you have someone on your side no matter what,” she says. “We sit down and we talk about things. Last week we talked about having to file for bankruptcy.”

Talking about money with a significant other can be a painful, awkward situation—especially when you’re in a dating phase. You’d think it would be easier in good times, but some are saying that the downturn has made it easier to both talk about finances and to learn about a significant other’s situation. Money is top of mind for many of us and a common topic of conversation. If someone is furloughed, laid off or had a salary slashed, their relationship to money becomes more apparent…

clipboard-listDid you know that you can get free legal work from a Harvard-educated attorney? (Well, almost-attorney.) Or work from home for $16/hour? (Hey, it’s better than unemployment.) Nice little tidbits like these can be found on a smart new blog, Create a Gig, which focuses on “career reinvention and low-cost entrepreneurship.” We like the sound of that: Cheap + empowerment. What could be better? The site is run by an acquaintance, marketing exec Jonathan Cropper, who’s got a good eye for leads that will help you in the new world of work. We hope he keeps at it. Check it out:

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