Preparing for the Next Downturn

If there’s one thing we learned from this recession, it’s that economies tend to be cyclical. Stock markets crash and rebound, unemployment rates go up and down, and real estate prices can decrease just as quickly as they increased during the boom years. Unfortunately, there’s very little we can do about it, and an economic downturn is likely to happen again.

With an ounce of prevention, though, there are some things we can all do to put ourselves in a better position the next time around. After all, sudden job losses might not have been so crushing had we all had enough money in savings to carry us through the downturn. And spiking credit card rates might not be quite as big of a deal right now if we hadn’t been carrying such a large debt load prior to the recession’s beginning last fall. If only.

No matter what mistakes we made this time around, it’s never too early to start planning for the next economic crunch. Consider this your emergency survival guide to a solid financial future, no matter what’s happening on Wall Street…

The Origin of Downturnaround

If you want to go pointing fingers over the economic downturn, there are the usual suspects—the quants at JP Morgan, the lenders at Countrywide, AIG… Take your pick. But Bard College’s Hannah Arendt Center for Ethical and Political Thinking wants to consider it more broadly. In a (free, mostly) conference next week at its campus in Annandale-on-Hudson, New York, the issue will be viewed as a “Burden of Our Times.”

Topics to be explored include the role that fundamental human greed, and not just the modern kind, played in leading us to the brink of a second Depression. Experts in consumer culture, risk and chance will discuss. Also on the agenda…

Recession Briefing 9.17: Grocers Feeling the Pinch

What you need to know today to survive and thrive in the recession.

Supermarket prices are plunging as the global downturn drives down the cost of staples such as wheat, corn and milk and grocers fight for the wallets of penny-pinching consumers. (Washington Post)

In the economic downturn, teenagers around the world have focused their spending cuts on clothes, games and food, according to a survey by a social networking site. (Reuters)

A Wells Fargo employee is now out of a job after spending the summer partying in a foreclosed mansion in Malibu. (Washington Post/EconomyWatch)…

Recession Briefing 8.13: Fed Says Recession Almost Over

What you need to know today to survive and thrive in the recession. (If you come across a good article or blog post about the recession pass it on. To receive Recession Briefing in your inbox, subscribe to our daily email.)

JetBlue Airways will offer an “all-you-can-jet” pass for $599 in which passengers can book an unlimited amount of flights within a one-month span. (CNN/Money)

The Federal Rerserve says the recession looks to be coming to a close, and so it’s starting to return to business as usual. (NY Times)

The French and German economies both grew by 0.3% between April and June, bringing to an end year-long recessions in Europe’s largest economies. (BBC)

Florida’s gator hunters are hurting as demand for high-end alligator skin purses, wallets, and belts has slackened due to the recession. (Tampa Tribune)…

Is Texas Leading the Downturnaround?

Six metropolitan areas in Texas are seeing the recession slow, say the brains over at Dismal Scientist. So if you live in Wichita Falls, Houston, McAllen, Fort Worth, Austin, San Angelo or San Antonio, it’s time to—well, we’re not sure what, but you’ll think of something.

According to the study, which looks at regions’ economies over the past six months, Texas has more cities that are in “moderating recession” than any other state. Almost everyone else is still in the dumps. (But not you, Portland-South Portland-Biddeford, Maine!)

Why Texas? The energy industry, for one. Plus the lack of a housing bubble. The Brookings Institution, which also has been tracking the recession’s effect on local areas, says Texas…

Recession Briefing 7.15

What you need to know today to survive and thrive in the recession.

More than half of executive-level job seekers think the recession has been good for their children, as a lesson that opportunity will not be handed to them. (Reuters)

Buoyed by some positive forecasts, Daniel Gross is ready to call an end to this whole recession thing. (Slate)

Marion Maneker wonders whether our culture of narcissism unleashed the boom — and thus the recession. (The Big Money)

How to Keep Employees in the Downturnaround

The unemployment rate is still high and new layoffs are announced each day. In other words, we’re not in a recovery yet. But companies should start thinking now about what happens as the labor pool shallows out.

Right now there are countless people who have had to take unpaid leaves or were hired on the cheap; when the economic situation improves, don’t expect them to show much loyalty to their employers. They’ll be interviewing on company time, taking calls from recruiters and jumping ship like crazy.

I frequently receive calls from candidates tied to the automotive industry. A former director of human resources who had to take a job as the HR manager of a very small operation and a 25% pay cut asked me to find him a new position. He told me that he was willing to take a pay cut but in exchange for flexibility with vacation and company car, but the Japanese company we were dealing with would not negotiate. Even though he has more than 20 years of experience, he won’t receive any vacation time until year two of employment. The vacation time for the five years after that is only one week. Do you think he’ll be sticking around that long if he has a choice?

Smart employers will be prepared to keep strong employees and add new (or old) ones to stay competitive. Ask these seven questions to get on track…

Recession Briefing 7.1

What you need to know today to survive and thrive in the recession.

An increasing number of parents are trying to get their babies into the modeling business in the U.K., and baby-modeling agents posit that parents might be doing this to earn extra money in the recession. (New York/Daily Intel)

Home prices were down 18%, year-over-year, in April. (Associated Press)

If a nationwide trend seen since January holds true, more than 300 businesses will file for bankruptcy — today alone. (USA Today)

Buying Time, or How I Learned to Spend Again

When I got laid off last December and had to curb my spending, there were some things that were hard to give up. I bitched about downgrading from a fancy gym to a utilitarian one. (Read Frugal Fitness for other tips.) I tried to convince my hairstylist to come to my house so I wouldn’t have to forego his services. I was sad about not sending my laundry out—and not just because I don’t like doing the wash. (Read I Miss My Dry Cleaner.)

But there were plenty of upsides to my new frugality. It was cozier to invite friends in for drinks than go out to a bar. It was fun and creative to craft a necklace out of a vintage brooch instead of dashing out to buy something new for a formal party. Though I hate negotiating, I convinced the cable and cell phone companies to give me discounts. I’ve always been financially responsible, but I felt especially virtuous in my new restraint and resourcefulness.

The downturn seemed to have a similar impact on society as a whole. It put the brakes on rampant consumerism. In record time, we have become less materialistic, less wasteful, less brand-obsessed. The savings rate has risen from zero to nearly 7 percent, the highest it’s been since the early 1990s. I’ve been hoping that the recession would be short, but have a lasting effect on our spending habits.

A little more than a week ago, I accepted a three-month consulting gig. It inspired a mix of emotions: I was relieved to have a steady flow of income for a while. I wondered what it would be like to work in an office again. I worried about doing a good job.

But mostly what I felt was an urge to spend, spend, spend…