By Thomas Sheffield
Weeks ago, I warned you that a recession is coming. The economy seemed like it would not slow down. This September marked the 10 year mark (I refuse to call it anniversary), of our last great economic meltdown. The economy has been growing consistently for the past 10 years since the end of the “Great Recession”. The country has added jobs and home prices continue to rise. The unemployment rate is below 4 percent. The GDP has grown consistently in the past 10 years. However, the DOW has lost all its gains and is on track to being the worst December since 1931.
We were promised the tax cuts would give GDP growth of 4% and would keep our economy strong. Corporate tax cuts for the largest companies was to spur economic growth. A study from the Brookings Institute says: “The new law will reduce federal revenues by significant amounts, even after allowing for the impact on economic growth. It will make the distribution of after-tax income more unequal.” Many companies are only paying employees $10-15 per hour. According to zillow.com, the median U.S. rent its $1440. If you make $15 per hour this means you make around $2400 per month before taxes. If you take taxes and health care cost out, you will be lucky to bring $1900 home. We take rent away from this, you have $460 left. That is enough to pay for a month’s child care. How are you supposed to live? Meanwhile, social services were also cut. Cuts in things like schools, housing, and infrastructure were made and the deficit continues to grow at an astounding rate.
Despite the growing economy and near-record unemployment, many people have a difficult time finding their financial footing. Studies show 38% of adults with income below $75,000 have no emergency savings in place. For many of us, the prospects of a recession could not happen at a worse time. We are still unemployed, underemployed and have no liquid assets to help us to recover.
This leads us to question what we can and should do. It is a fight to build wealth no matter where you are in the process. It seems we are surrounded by conspiracies to take money out of our pockets. But we must fight the good fight. Continue to save, invest and grow your net worth even when it seems impossible. Remember to throw your financial support behind our local businesses and newspapers like this one. Our reckless and wasteful spending habits have silenced our displeasure for far too long. Be mindful of how and where you spend your money. If a business does not respect the planet or all people, then we will withdraw our support. Let us start by not spending money we don’t have and support our local businesses.
Now is the time for action. Please feel free to contact me email@example.com or you can follow me on Twitter @tcsheff.