Will US fall into recession this year - or is it already in one
January 09, 2008
By: 
Arohan
Category: Economy
Over the last few weeks, many companies have come out and expressed their fear that the US economy may be heading into recession some time in 2008. These companies include AT&T and UPS. Countrywide CEO has already claimed that the housing market is in its worst recession since the Great Depression. Reviewing the market performance since the start of the new year also shows that wall street is also concerned about possible recession in the US
Will it happen or not is anyone’s guess
The way I see it, the economy is already in recession in pockets. Sure, the housing market is in doldrums, and is already affecting the consumer morale. There are geographies in the country that are already suffering. Michigan is one. The USD has been plummeting for a while making even the cheap imports more expensive, at the time when the consumers have started to pull back on their discretionary expenditure. The malaise seems to be spreading, not receding, so much so that White House, after being in denial for some time, is now talking about possible measures to kick start the economy
What is a long term investor to do?
This are precisely the times when being invested in value stocks with high margin of safety makes sense (it actually makes sense in all economic times). Be patient and look for opportunities outside of US. While the US downturn may affect the foreign markets as well, most of the reasons for the US economic downturn is local. Additionally, if you do want to maintain exposure to the US economy and have a long term horizon, consider investing in companies that have global franchises and are financially strong. Good values among such companies are not hard to find today. Take Bank of America for example
But most of all, keep some cash that can be deployed to scoop up value stocks as the opportunity to do so will arise more and more in rest of 2008. And be patient
Related posts:
- The other side of the recession debate
- Recession is here! What should an investor do?
- Global markets decline - is there a value in international diversification?
- Investing in 401K plans - when is it not worth the trouble
- The coming housing boom …
January 10th, 2008 at 1:26 am
I agree that we are already in a recession in small pockets, though lagging indicators may not reflect this for some time. Enjoyed your site.
January 10th, 2008 at 3:52 am
Thanks frugal dad for stopping by! Loved your site too. I do hope and expect the US to come out of this rather quickly but let’s see
January 10th, 2008 at 10:19 am
I think they are suppressing all of the info on the current state of the economy. I was disappointed to find in your poll that not all the candidates are listed. I would not vote for any of them, but instead for Ron Paul. If you add him to your poll, I’ll vote!
January 10th, 2008 at 2:22 pm
Thanks Laura for stopping by! Many readers have requested to add Ron Paul to the poll, but unfortunately since there are already votes in, I am not able to change the poll now. But I do encourage readers to make their wishes known via comments so at the end of the poll when I publish the results, I will take this into account as a write-in vote
January 16th, 2008 at 3:39 am
[…] Investing Life - I really enjoyed his post on “Will US fall into recession this year - or is it already in one” Arohan believes that pockets in the U.S. are already in one so keep your cash handy for some […]
February 5th, 2008 at 8:19 pm
[…] On this site we insisted that the recession is already here, even though it may be in pockets, in an earlier article. […]