549 Clothman’s 2010 Economic Forecast
2009 exposed the soft under belly of our consumer based economy. This economic train wreck has been in the making for decades and has opened our eyes to the fact that our nation’s credit driven, materialistic gluttony is what it always was a dead end cul-de-sac. I other words a dead end with a way out.
I suppose it was our impoverished background combined with Jesus’ teaching about contentment and simplicity that led me and Clothwoman to avoid the onramp to the high speed Interstate of overspending and hording that so many of our fellow Americans were traveling on. Instead we choose to take the slower two lane back roads of less is better than more, used is often as good as new and bigger does not always mean better.
Our frugal philosophy wasn’t always popular with Clothgirl and Clothboy as we drove our 10-20 year old vehicles and resisted upgrading our computers until they became so outdated that even third world countries wouldn’t take ‘em. But when the financial storms of this Great Recession came crashing upon us our mortgage and monthly budget stood firm like a house built upon a rock.
Unfortunately, this recession was so severe that even some penny pinchers have found themselves scrambling to weather the storm while those who spent wildly and were already swimming in debt prior to the recession are now sunk.
Where do we go from here? What can we expect in the New Year? Yes, these are merely the musings of a middle-aged tightwad who wears his blue jeans until you can see through them. However, I also have a credit rating over 800 and no debt except for my mortgage. So for what it’s worth, here’s Clothman’s Economic Forecast for 2010.
America stays flat
Apart from a few locally centered bright spots the American economy will stay sluggish.
Our economy has five main sectors: manufacturing, service, military & government, healthcare and education. Over the last couple of decades manufacturing has been fading while the other four sectors have been booming. Like eating 7000 calories of fast food a day with no exercise, this is a completely unsustainable pattern.
Our national addiction to credit at all levels has fed this negative pattern; it is also what has thrown us into the deep end of the financial pool treading water without a lifejacket. Until we can reverse this trend we will continue to struggle and many more levels of government along with businesses and households will go under. Unfortunately, I don’t see a reversal of this trend anytime soon.
Budgets get buzz cuts
As more and more of us sink in red ink we will finally realize that the only way we can survive is if we cast off our insane spending habits. Our bloated budgets are like sandbags strapped to our legs. This will mean big, painful reductions in spending. Governments, businesses and households will all be forced to get very short haircuts …buzz cuts as we used to call ‘em. If our levels of government don’t enact major budget cuts and discontinue their reckless spending I’m afraid big time inflation will descend upon us like a second tidal wave of this economic storm. The resulting hyperinflation will be worse than the recession we’re struggling to emerge from.
New jobs, lower wages
How many people do you know pay their bills with a manufacturing job? How many do you know earn a living in one of the other four sectors of our economy that I mentioned above?
I’m not a prophet but I know your answer. Most of your acquaintances have nonmanufacturing jobs. That’s been the American way. That’s what’s killing our economy. That’s about to change.
Americans have no choice but to be productive again. If we are going to survive as an economy we must start slapping “Made in USA” stickers on products again. This will mean lower wages to compete globally; which will in turn mean a lower standard of living than what we’ve been accustomed to for the last couple of generations. I know this scares some folks, but for a dude who grew up without much, having less is no big deal.
On the positive side this adjustment will also result in a rebirth of American ingenuity and craftsmanship. Instead of outsourcing most of our production jobs we will invent ways to manufacture products right here; affordably, dependably and with pride. It will be a beautiful thing.
The world joins party
Americans have enjoyed the most extravagant lifestyle the world has ever seen. Note that sentence is written in the past tense. Billions of people are now inviting themselves to the party that has been mostly been at our place for the last several decades and there’s not enough stuff to go around. America has no choice; we will be consuming a smaller piece of the global resources pie.
You won’t see me crying much over this development either. It was inevitable and it is about time. When 90% of the world’s population doesn’t even own a vehicle and far fewer own a home, it is selfish for us to expect that every decade we should be driving a new car into a bigger garage that’s attached to our better home. The same could be said about all the computers, phones, televisions, clothing and other stuff we cram into our homes.
Like it or not, American’s expectations of regarding material stuff is about to experience a long-over-due reality check. In the near future success will no longer be a bigger house and a newer BMW …all of which is leveraged against credit. No, the new measure of success will be a modest home and a used Ford …both of which are paid for!
It’s all right
I’m not a doom and gloom dude. I don’t think 2010 will be a great year or even a good year but it will certainly be better than 2009. I’ll take a flat economy over a sinking one any day. As I said at the outset, my philosophy on economics goes something like this: less is often times better than more, used is usually as good as new and bigger doesn’t always mean better. Looking through these lenses puts the New Year into perspective. It’s going to be all right.
Here’s a few practical suggestions for 2010:
Avoid Credit
If you’ve got a credit card use it to gain air miles but pay off your balance every month. I repeat, pay off your balance EVERY month. The first month you don’t cut up the card. If you can’t pay cash for an item today, how are you going to pay cash plus interest tomorrow?
Save If you don’t have a savings account, start one. If you don’t have money to put into savings create some. Eat out less, sell that extra vehicle, wear your clothes until they are actually worn, turn your thermostat down and put on a fleece, quit smoking, bike to work, change your own oil and spark plugs, cut each other’s hair… The ways to generate savings are endless.
Delayed Gratification
Hard times are great times to develop those weak patience and contentment muscles. If you hate your job, hate it longer. Don’t leave your job until you already have a better one. If you can’t stand your car, stand it a little longer. The cheapest car you’ll ever own is the one you already own. If you simply can’t wait to see that great new movie at the theater, wait anyway. It will still be new for you when you rent it on DVD.
Give
The best response to a negative is a positive. This is what Jesus had in mind when he said, “…if someone drags you into court and sues for the shirt off your back, gift wrap your best coat and make a present of it. …No more tit-for-tat stuff. Live generously.” Lost your job? While you’re looking for work use some of your extra time to volunteer. Having troubles paying the bills? Write or visit your relative in the nursing home who is having troubles staying alive. Found $20 in your jacket? Send it to a relief fund for Haiti. It is more awesome to give than to receive!
Smile
The practical steps above remind me of going to the gym to work out. I usually have to talk myself into going. Then I often have to force myself to keep giving it my best effort. But after I’m done I feel like a million dollars. Tough times can make us better people – if we let ‘em. We have to have the right perspective. What says it better than the classic Wet Willie song:
Well you say you got the blues You got holes in both of your shoes, yeah You're feeling alone and confused You got to keep on smilin', just keep on smilin'
Keep on smilin' through the rain Laughin' at the pain Just flowin' with the changes Till the sun comes out again
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