We anticipate a coming recession in 2008. As such, our counselors are planning for increased requests for assistance from financially distressed consumers.
Leading economists now put the recession risk as high as 50% in 2008. This is more than twice previous estimates. Here is why.
- Economic indicator indexes are down, which suggests that the economy is slowing. Manufacturers are already planning for slower growth and higher inventories.
- Housing prices continue to fall in many markets. This is largely because of the tremendous numbers of foreclosures that are also dragging down surrounding home values.
- Stock prices have dropped. Key market indexes reflect what appears to be the beginning of a bear market.
What this Means
Our organization understands that these signs all point to increased consumer desperation. As such, we anticipate that requests for assistance will increase throughout 2008 and into 2009.
Unemployment could increase as older workers with sagging portfolios put off retirement to remain in the work force. A falling dollar could increase inflationary pressures. Prices are poised for faster increases, with emphasis on industries sensitive to energy costs.
Salary increases will likely lag behind increases in consumer prices. This could reduce buying power for many households.
No one knows whether recession will actually occur. Many economists predict it. As for us, we are planning for the worst and hoping for the best.
