While most of us don’t believe we’re out of the recession, no matter what the statistics say, we can all agree that we made a few sacrifices over the last year and a half. Some have made a lot of sacrifices. One of the things my wife and I cut back on was dining out. We would go out to restaurants several times a week, not counting weekend festivities with our friends. For a dual income, no kid household, it’s not uncommon because our other expenses are generally low. However, with the uncertainty of the recession and my wife starting a PhD program, we thought that cutting back on one of our largest expenses was a smart idea and we believe the changes will stick even after the economy truly recovers.

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Yesterday, the Department of Commerce reported that the annualized GDP (gross domestic product) grew to 3.5% in third quarter. This is significant because, by definition, a recession is two straight quarters of shrinking GDP. A 3.5% increase in GDP would mean, at least technically, the recession was over. Four straight quarters of negative GDP growth, the worst of which was the first quarter of 2009 (-6.4%), has finally come to an end.

Hooray! Right?

Unfortunately, no one living in the real world cares much for technicalities. Millions of jobs have been lost, with hundreds of thousands more each month, and so I don’t think many people feel like the recession is over even if the bean counters say so. One positive sign is that the growth beat expectations by 0.3%, which isn’t a bad thing.

Two things worry me:

• How much of the recovery was the result of various government programs meant to stimulate consumption? We had all the bailouts, cash for clunkers, first time home buyer credit, and several other programs that cost billions. People are still being laid off at the rate of hundreds of thousands a month, unemployment for September 2009 was 9.5% (not seasonally adjusted), and people without jobs tend to spend less (duh). Is this sustainable?
• Check out the 2nd quarter of 2008. In the 1st quarter of 2008, we saw a negative GDP growth figure. Then we “pulled out” of a potential recession in the 2nd quarter only to fall back into the trenches for a full year.

So, while we’re technically out of the recession, does it feel like we’re out of the recession? What do you think?

(Source: CNN Money)

On Wednesday, the Federal Reserve will conclude its two day FOMC meeting and announce what they plan to do with the federal interest rate. Most experts expect the rate to stay at the 0% to 0.25% range the Fed set several months ago. With unemployment near or above double digits in some areas, it would be extremely difficult for the Fed to justify a rate increase at this point.

Last week, Jim asked if you thought the recession was over. In the post, he highlighted Ben Bernanke’s comments about how we were “very likely” seeing the end of the Recession but it doesn’t appear that experts believe him!

In general, the Federal Reserve lowers the target rate when it wants to boost the economy. Lower rates mean businesses can borrow money cheaper. It also means banks offer lower rates on deposit accounts, like CDs and savings accounts. The lower they go, the less incentive we have to save – so we boost the economy be spending more. The 0% – 0.25% target range is about as low as it can go.

We need to wait until Wednesday to see what the Fed announces but experts believe rates won’t increase until next year. If you were hoping for a frothy return to economic prosperity… you might have to wait until next year to pop the bubbly.

Fed not acting like there’s a recovery [CNN Money]

Earlier this week, Ben Bernanke, Chairman of the Federal Reserve, said the recession was “very likely over” but that the unemployment rate would likely still go up. There’s a lot of talk about a “jobless” recovery, that is a recovery in which new jobs aren’t created, with the unemployment rate not falling back to the normal 5% for at least another four years. Bernanke specifically said that the recession was likely over from a technical perspective, which is to say that we’ll probably still feel like a recession even if we don’t have two consecutive quarters of negative GDP growth.

So I wanted to know from you – do you think the recession is over? It’s one thing to look at “statistics” and declare victory, it’s another to look people in the eye and tell them that the recession is over.

Personally, I think that you can throw technical out the window because regular people don’t really care. Until people stop being afraid they’ll lose their jobs because of the economy, the recession isn’t going to be over. There have been a lot of positive things about this recession – Americans are repaying debt and saving more, frugality has made a resurgence, and there’s been a greater emphasis on emergency funds.

So… is the recession over?

(Photo: arvindgrover)

Not sure where to invest your hard earned money? Not even sure if you should invest it? Where to Put Your Money Now by Peter Passell is the latest in a line of books focused on that very issue. It’s a mere 130-something pages written by a Senior Fellow of the Milken Institute, a well-respected independent economic think tank, and a fairly quick read.

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I think it’s safe to say that we’re knee deep into a Recession. In February, I had the great fortune of being on American Public Media’s Marketplace Money with Tess Vigeland, Lynnae of BeingFrugal.net and Steve at BripBlap.com. Back then, we didn’t know if we were going to be in a recession but everyone pretty much believed we were well on our way. Here’s what I said:

JIM: It’s been crazy. Way back in September and October and November, when the economy was slowing down, but people hadn’t really cemented the idea that we were in a recession. Everyone was focused on the stock market and how it was, you know, one day it would be down 300 points, then up. Then down. My readers were saying, what should I do with my 401(k)? But in the months that have been since, everyone’s now worried about what should I do because I’m afraid I might lose my job? You know, it’s a shift away from “Oh, my 401(k)s down,” to “I might lose my job and not even have a 401(k) to contribute to.” And I think that’s led to a lot of nervousness.

It’s been three months and with the stock market recovering from the doldrums, I’m curious to know what everyone is worried about now or what they’ve been focusing on.

For me, I’ve been focusing on keeping my financial house in order. I call it personal finance defense and the best offense is a good defense.

We’ve returned to a more frugal lifestyle, eating out less than we did before and deriving entertainment from cooking our meals (two birds with one stone!). We’ve focused on making sure our financial documents are well integrated and organized (hence the deluge of videos about the charts we make, like the cashflowchart and the financial network map). We have continued to regularly review our credit reports to catch any errors and to make sure our credit score is as high and as accurate as it can be.

What have you been focusing on or what has been worrying you, if anything?

(Photo: anders-vindegg)

Do you know what the top ten recession proof jobs are? According to Laurence Shatkin, author of150 Best Recession-Proof Jobs, they are:

1. Computer systems analysts
2. Network systems and data communications analysts
3. Network and computer systems administrators
4. Registered nurses
5. Teachers, postsecondary
6. Physical therapists
7. Physicians and surgeons
8. Dental hygienists
9. Pharmacists
10. Medical and health services managers

Unfortunately, the list itself is useless. It’s useless because we’re already in a recession. The people who are looking for jobs can’t switch careers on a whim. The people who are working aren’t going to quit their jobs for a “recession proof” job. In that respect, they’re useless because you can’t act on it. Fortunately, you can learn something from it.

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Over three million, six hundred thousand jobs have been lost since the recession started over a year ago. Three million, six hundred thousand. If you’re one of the three million, six hundred thousand, my heart goes out to you and I hope you’ll follow my friend Sarah as she chronicles her battle against joblessness in Diary of a Firee. If you still have your job and you haven’t started preparing for the possibility that you will lose it, start preparing. You have all the tools you need right now to fortify your finances so that, should you lose your job, you will be prepared for it.

These tips were tailored for young professionals but they can apply to anyone. They are focused less on family-related money saving ideas and more on the things individuals and couples tend to do, especially if they’re in the younger working demographic.

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The National Bureau of Economic Research has determined that the United States economy has been in a recession since December of 2007… this really comes as no surprise to most people. In fact, last October, I wrote a post outlining what I think one should do during a recession and that one predates the technical start of the recession by a good two months (here’s what you all said when I asked whether we were in a recession last August). If you boosted your emergency fund starting then, you would’ve had a two-month head start on the recession! The lesson from this? Believe me! (Ok ok, I’m only kidding, I can’t see the future and I’m probably wrong more often than I’m right on about everything)

Since then, I’ve been focusing a lot more of my articles on frugality (such as 100 money saving tips and 11 tips to save on shipping) because I think frugality is the way we can get ourselves, individually, through this economic slump. More broadly, we need people and businesses to spend money so the economy recovers but individually, and this is selfish advice, you need to have a bunker mentality and save your way through this.

Stick that money in your mattress, a high rate CD, or a plain old online savings bank… until the clouds roll past anyway.

(Photo: bobjagendorf)

Before the last few weeks, I saw most of the talk about a recession as just talk. Experts were trying to get ahead of the curve on calling an economic slowdown through the US economy and we as consumers were eating it up. With short term lending on the fritz (ignore the movement of the stock market, there’s too much noise in that), companies are truly going to have an economic reason to start cutting back and labor is far easier to reduce than any other asset.

CNN Money just did an article on this very idea, of who is most at risk in a downturn, and they highlighted people who fail to perform, who are relatively overpaid compared to their peers, and those that do not adequately fill a business need.

Based on my limited experience in the workforce, I think the folks on this list of best paying careers are pretty safe but here are the groups that I think are at risk:

Cost Centers

A cost center is a department in an organization that doesn’t product a direct profit. A research and development department is a cost center, the marketing department is a cost center, and the HR department is a cost center. While cost centers are important, cuts often start there because they don’t directly affect the bottom line. If you’re a widget maker and times are getting tough, you might slash your HR department in half because you don’t intend to hire anyone in the next year if things stay rough. You’ll let go of an HR person before you’ll let go of someone working the manufacturing floor because the technician directly contributes to profit when he or she makes a widget.

Low Oversight or Visibility

If you’re working on a project that has very little visibility or has limited oversight, I’d try to find out how important it is to the firm. If management needs to pare away some overhead, are they going to cancel the project you’re working on? If it’s an important project, why is there little oversight over its progress? If it truly is an important project (it’s not uncommon for management to overlook important projects simply due to volume) and you want to help ensure it’ll stick around, try to get more visibility.

Contractors/Temps

If you’re a contractor or temporary employee, I’d be the most wary because “not renewing a contract” is the easiest way to let go of someone without dealing with the legal headaches. It could have nothing to do with your job performance, need, or anything else – it’s simply easier to let go of someone who isn’t a full time employee of a company.

Solution? I don’t know and I don’t know if there is one, the best advice I can give is that you should always, in both good times and bad, have a contingency plan. If you’re a contractor/temp now, you should be pushing to go full-time or have another job lined up. If you’re in a low visibility project, get yourself on a high visibility project. If you’re in a cost center, maybe find a new job at a firm where your specialty isn’t a cost center (accountants to an accounting firm, HR specialists to a head hunting firm). And as always, boost up that emergency fund.

(Photo: bobjagendorf)