The Economy and the Job Market – Searching For Growth in Troubled Times

The economy is clearly not in good shape. We may or may not currently be in a recession, and while conditions won’t get nearly as bad as the Chicken Littles of the world would have us believe, they most certainly won’t improve either. Well, dramatically, anyway.

The economy has been under a three-pronged siege of falling housing prices, rising commodity prices and an ever weakening labor market. And each aspect of this siege appears inextricably linked. What makes the current situation so difficult is that all three of these issues are and will continue to have meaningful impact on the average American’s pocketbook. Rising food and fuel costs coupled with lower wages yields a cash flow problem that we will not be able to ignore. That is what makes our current situation so different than that of 2001. That recession, spawned by the “.com” bubble burst, saw peoples overall stock portfolios and retirement accounts diminish or disappear. But in all honesty, who pays any considerable attention to that? Thanks to an increasingly innovative financial market and its willingness and ability to redistribute risk, lenders were right there to lend. And borrowers there to borrow. Consumer spending barely dipped, mortgage applications spiked, and we spent our way out of the 2001 recession.

It seems, then, that the current downturn is much more an extension of the 2001 disaster than a unique, separate situation. Can you ever really exit a recession if you borrowed the money to do so? Our economic doldrums have been a long time in the making, providing a solid base for what figures to be an extended period of zero to slow growth. And that’s why things don’t figure to improve too soon.

To exacerbate all this, the lumbering political machine in Washington has begun talking about the economy, and, more specifically, increased regulation of financial markets. This will only make things worse. It isn’t that taxes and regulations are altogether bad, it’s just that Congress has little, if any, idea how to brandish these tools. What we should expect is a weakened ability for different industries to tap into investment capital, inhibiting their ability to rebound from their current crises, and weakening the outlook overall in financial well-being for fiscal quarters to come.

So which industries stand to improve? To answer this question we need to think critically about what glaring problems the current economic situation has uncovered.

The most striking of these problems is America’s source of and need for energy. As mentioned, oil prices are high and should continue to go higher. China and India, with their burgeoning economies and swarming populations, are now dominant players in the international demand for fuel. And supply isn’t even constant; it’s falling. Our reliance on oil is clearly a very, very expensive habit. Setting aside environmental concerns (which are important), we simply cannot afford to rely on fossil fuels as we once did. The industry with the most long-term growth potential, then, is the renewable energy category.

Renewable energy is comprised of dozens of sectors, each giving rise to yet more sub-sectors. Wind, solar, and hydroelectric power are all growing, not just in the US, but around the globe. Bio fuel seems the heir apparent to gasoline (just look at Brazil), and carbon emission legislation stands on the brink of being passed. Each of these areas, and there are many, many more, represents tremendous job opportunities with long-term growth. And what’s more, they call for a broad spectrum of backgrounds.

Scientists and agriculturalists are obvious. It will become important to devote time and money into research projects, such as ethanol yield from various crops (i.e., corn, sugar, algae, etc.), and what type of return we could and should expect from each.

Carbon emission regulation would force big business to manage a certain number of “carbon credits.” Carbon credits are simply an accounting tool businesses will likely have to adhere to, by law, in an effort to keep their carbon footprint in check. Companies expecting to exceed their carbon credit limit must buy additional credits from companies willing to sell them – companies, of course, who are expecting a carbon credit surplus. Therein lies a marketplace, much like stocks and bonds, where finance and accounting professionals will clearly be in high demand.

Most importantly though, as it relates to career paths and job opportunities, small companies will be born to capture different pieces of this emerging world of renewable energy. And these companies will need the same things as any other company. Human resources, marketing, administration, law, and management are all areas that will see growth – so long they’re within the right business – as these are professional areas that will always be in demand. Exactly how much depends more on a specific company’s positioning within the greater economic landscape than it does the actual current economy.

For my money, any company with a business model that incorporates forward looking thought regarding renewable energy will fare well in the short, medium and long term.

Aiden was born and raised in northern New Jersey. He attended New York University, where he graduated with a bachelor’s degree in Finance. He currently lives in New York City and works in the equities trading division of a large investment bank. –Aiden Quinn

Forget the Recession – There is More Than Enough to Go Around!

This is a frightening economic time, not just for the United States, but for the world as a whole. Everyone seems to be in a panic and perhaps rightfully so. It seems like every time you turn around some seemingly stable company is filing Chapter 11 or being acquired in a hostile takeover.

The only thing that seems certain at all about our fiscal future is that it is uncertain. Or is it?!

Perhaps I should rephrase that and say, should it be?

People seem to be under the impression that there just isn’t enough money now. Somehow, somewhere the money disappeared and there just isn’t enough to go around. They couldn’t be more wrong. The money is there, it just isn’t moving (and when it is, it may be going to different places than we are used to).

The reality is that there is plenty of money to go around. Enough money to boggle your mind. So much, in fact that most people couldn’t even fathom the riches that are out there and potentially available to them.

To add some substance to this point let’s just look at one individual: Bill Gates- or more specifically, his net worth. Okay, so Bill Gates is not your “typical guy”. Of course not, he currently ranks third on the list of the worlds richest people with a net worth of $58 Billion (yes, that’s billion with a “B”).

$58 Billion is an awful lot of money, don’t you think? As of September 2008 the estimated world population was 6.725 billion which means the Bill Gates has enough net worth that he could share over $8.6 Billion with each and every person on the face of the earth. One man could potentially turn every person in the world into a billionaire.

Now take into account that there are over 1,000 billionaires on the world list. Just in this group alone there is well over one trillion dollars of net worth and this doesn’t even account for all of the multi-millionaires out there today.

The average person is struggling to get by with a modest income probably somewhere south of $100,000 and can only hope to gain some level of fiscal comfort. Their reality probably even puts off the thought of being a millionaire. There is enough to go around! Most people just don’t know how to go about getting their share.

Most people are pigeonholed by their limiting beliefs and the jobs that they have as a result of that. There is only so much room for advancement and pay increases. The volatile nature of the markets and the uncertain economic climate make most corporate companies squeamish by the very thought of dolling out any more money than they have to.

If you want to get ahead you have to take control of your financial future! Fortunately people today have opportunities that were once held for the rich and not the masses. Today, because of the abundance of possibility in the home-based business arena, every person has the ability to take a grasp of their future and to start building their wealth and fortune. And they can do it NOW!

Finding an opportunity with quality products, a proven and easily duplicable system, training and leadership is paramount. Once this is found, success is only a short while away.

Go grab your piece of the pie. No one is just going to hand it to you.

Brian Pray is one of the truly “good guys” in the home business industry. Fueled by an unyielding desire to help others achieve great success he believes that his prosperity comes as a byproduct of this. He has built his foundation on very simple values and beliefs and knows that truth, integrity and character have made him the person he is today. More information on Brian Pray is available at http://www.AllYouWantInLife.com

Unemployment and Housing Data Point to Bleak

Existing home sales fell to 4.86 million units, about 2.6% below consensus estimates of 4.94 million units. The report also cited a huge deterioration in median home prices, down to $215,000 or down over 6% from last year. This highlights the bleak outlook for the housing market, as the housing market has yet to find a bottom. With mortgage rates set to only head higher in the coming months, I would expect more defaults on mortgages as there seems to be no slowdown in the turmoil of the housing market.

Weekly unemployment numbers also came in worse than consensus estimates, at 406,000 for the week ending July 19th, 2008. This can only mean bad things for the overall July unemployment numbers that come out next Friday, as some analysts expect the overall unemployment rate to head higher from the 5.5% that was posted in May and June. If you do not remember what happened the last time unemployment increased, just look back and you will see that the Dow lost well over 300. If we really are in a recession, it is also important to note that unemployment during a recession has always hit at least 6%, if not more. Being that the unemployment number is a leading indicator, it seems as though a recession could be imminent, if we are not already in one. That being said it seems even more likely that we will head into a consumer recession as consumers struggle to receive a consistent stream of income without a steady job, which they have become accustomed to over the past few years.

Spending habits will clearly have to adjust for this change in net income per household, which should weigh negatively on the economy, especially for discretionary companies. The further deterioration of the housing market will continue to weigh negatively on financials and home builders until there is a clear sign that there is a turn around in the hosuing and mortgage industry. It also does not help that commodities have had a huge run up in the past year, weighing on corporate profits along with food and energy prices on the consumer. I would continue to recommend staying in traditionally defensive sectors, such as Consumer Staples and Healthcare, as they seem poised to weather the current downturn since over 70% of Staples and Healthcare companies have reported earnings better than analysts estimates. With the strong possibility of a consumer recession, sticking with staple stocks such as Proctor and Gamble PG, Wal-Mart WMT and medical suppliers such as Becton Dickinson BDX, should continue to prove a beneficial strategy as these companies offer dividends and reduced volatility in one of the most volatile markets in years.

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