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New year will not be prosperous
Economist says current recession
May continue beyond 2009
Thelma Grimes/Vail Sun
As talks of bailouts, auto industry meltdowns and national, state and local lawmakers cutting funds dominate the headlines, average people are working to cut costs wherever they can.
As the New Year begins, economists and lawmakers are still talking about what happened in 2008, and what that means in 2009. The cost-cutting trend started in 2008 when gas prices soared, escalating to nearly $5 a gallon last May. With increased gas costs, people started cutting back on other spending. Now, even though the price of gasoline is under $2 a gallon, they are still hesitant to spend. The result is falling housing prices and declining retail sales. Retail sales have decreased 6.9 percent, and restaurant and bar sales decreased slightly.
John Atkins, of Vail, said his family has cut back on eating out, entertainment, and has taken fewer vacations out of town.
"Also, we are cutting back on using credit cards, if we don't have the cash to pay for it, we will have to save for it, or do without it," he said. "Being smart consumers, looking for the best deal and bargains."
The lack of spending is already impacting state and local budgets. State lawmakers say they are facing a $2 billion deficit, while the City of Tucson has already started cutting programs, and Pima County is facing a $30 million shortfall in the new fiscal year, which begins in July.
During a Dec. 12 economic outlook luncheon, Marshal Vest, director of the Economic and Research Center for the Eller College of Management, said the country has been in recession since 2007, noting that the cause was too much innovation and too little regulation.
With the expansion of credit and loans to unqualified borrowers, Vest said the word of the year became bailout.
Congress approved a $700 billion bailout for Wall Street and considered another for the auto industry before the close of 2008.
"I have deep concern for the national economy. We as citizens are expected to live within our means, the government should do the same," said Atkins. "Bailouts will create dependency where no one is held accountable or responsible for failure, because a safety net will always be provided by the government. For the next year, there will have to be some changes in our spending habits - that includes the government. A little sacrifice by all will help, our economy will bounce back, but it will take time for us to get back on track."
Congresswoman Gab-rielle Giffords, D-District 8, said the Wall Street bailout was necessary because in the future it would impact Southern Arizona residents' ability to get loans for a new home or car.
Vest said the effects on the real economy has sent consumer confidence plunging to the lowest levels since the 1980s, autos sales are at their lowest since 1983, the unemployment rate is at a 14-year high and homebuilding is at its lowest since 1945.
In Arizona, Vest said the unemployment rate is at 6.1 percent and 5.8 percent in Tucson. He expects that trend to continue, reaching as high as 8 percent in 2009.
The housing market is still in a free-fall, as property values continue to decline, and new home permits have dropped 74 percent in Tucson from three years ago.
In Tucson, population growth is also a fact to consider, as net migration plunged by 6,000 in 2008, making the annual growth rate drop 1.1 percent, which means fewer snowbirds coming to the state to spend money.
In concluding, Vest said the recession will likely extend well into 2009 or beyond, foreclosures and bankruptcies will soar, consumer spending will not lead the country out of recession and the public sector will struggle to have balanced budgets.
The business sector is already being hit in Tucson, as Mervyns and the Shoe Pavilion have closed and KB Toys and several other stores in Park Place Mall are preparing to close for good.
Instead of the big Black Friday sales, this year retailers were really aiming for shoppers after Christmas. With advertisements boasting the biggest sales of the year, retailers said early last week it did not work, and sales are still down.
In the meantime, residents continue to wonder how to deal with finances in tough economic times, and still manage to pay bills and live comfortably.
In fact, according to the American Psychological Association's (APA) 2007 Stress in America survey, money and work are two of the top sources of stress for almost 75 percent of Americans. Add to the mix headlines declaring a looming recession, and many begin to fear they cannot handle any more.
The APA said it's just important to manage stress in tough times as it is to keep finances in order.
Psychologists first recommend that people not panic. While there are unknown effects in every economic downturn, the nation has experienced recessions before.
The best way to avoid stress is to look at financial stressors and create a plan. Write down ways the family can reduce spending, and how to manage the entire family budget more efficiently.
This goes with what economists across the country are also telling residents to do as the health of the economy remains unknown for the next few months or the entire year.
Businessknowledgesource.com, said when times are hard, people worry about losing their jobs, investments going down, retirement accounts being depleted, college funds being used and much more.
Economists said there are 10 steps people can take to assure financial well-being even if the rest of the nation seems to be struggling.
First, people should pay off debts as quickly as possible. The belief is that when times are tough, paying the minimum amount due so there is money left over is a good idea. However, financial advisors agree that if a debt is not paid down, people owe even more, and the toll on everyday life and sanity is huge.
The second tip is to cut all unnecessary expenses.
Evaluate monthly spending and find places to cut back such as in entertainment. Get the smaller cable package, a cheaper cell phone plan, rent fewer movies.
Thirdly, in tough economic times, people are reminded to be more valuable at work. In tough times, people start to worry about job security, to avoid the chopping block, be more pleasant to co-workers, be helpful, be efficient and become as irreplaceable as possible.
The fourth tip is to keep investing, especially in retirement accounts.
Just because the market is down, doesn't mean to stop investing in the future. In fact, many say this is the best time to invest, especially if you have the money to do so, and the time to wait for it to pay off.
The fifth tip is to always have a cash fund. Banks are FDIC insured, and they insure deposits up to $250,0000. However, if a bank does fail, it could take weeks or months to get the money back.
The sixth tip is to reduce energy expenses. It may not be possible to stop using utilities, but you can cut back. Start taking shorter showers, car pool if you can, use natural light and turn the television off when you are not in the room.
The seventh tip is not so much for financial well being, but more for mental health. Advisors say don't look if you can't take it, meaning if you can't handle the news when checking portfolios, just don't look.
The eighth tip is to claim more taxes, which means come March and April you will get a bigger tax return. When times are tough and money is tight, you will appreciate the little extra you get from Uncle Sam.
The ninth tip is to save money. Besides paying down debt, everyone needs a bigger savings account. Try to save enough money to cover three to six months of expenses.
The 10th and final tip is to learn how to tell the difference between wants and needs. Anyone looking to improve their financial outlook, no matter what the economy is like, should learn to be content with what they have.
May continue beyond 2009
Thelma Grimes/Vail Sun
As talks of bailouts, auto industry meltdowns and national, state and local lawmakers cutting funds dominate the headlines, average people are working to cut costs wherever they can.
As the New Year begins, economists and lawmakers are still talking about what happened in 2008, and what that means in 2009. The cost-cutting trend started in 2008 when gas prices soared, escalating to nearly $5 a gallon last May. With increased gas costs, people started cutting back on other spending. Now, even though the price of gasoline is under $2 a gallon, they are still hesitant to spend. The result is falling housing prices and declining retail sales. Retail sales have decreased 6.9 percent, and restaurant and bar sales decreased slightly.
John Atkins, of Vail, said his family has cut back on eating out, entertainment, and has taken fewer vacations out of town.
"Also, we are cutting back on using credit cards, if we don't have the cash to pay for it, we will have to save for it, or do without it," he said. "Being smart consumers, looking for the best deal and bargains."
The lack of spending is already impacting state and local budgets. State lawmakers say they are facing a $2 billion deficit, while the City of Tucson has already started cutting programs, and Pima County is facing a $30 million shortfall in the new fiscal year, which begins in July.
During a Dec. 12 economic outlook luncheon, Marshal Vest, director of the Economic and Research Center for the Eller College of Management, said the country has been in recession since 2007, noting that the cause was too much innovation and too little regulation.
With the expansion of credit and loans to unqualified borrowers, Vest said the word of the year became bailout.
Congress approved a $700 billion bailout for Wall Street and considered another for the auto industry before the close of 2008.
"I have deep concern for the national economy. We as citizens are expected to live within our means, the government should do the same," said Atkins. "Bailouts will create dependency where no one is held accountable or responsible for failure, because a safety net will always be provided by the government. For the next year, there will have to be some changes in our spending habits - that includes the government. A little sacrifice by all will help, our economy will bounce back, but it will take time for us to get back on track."
Congresswoman Gab-rielle Giffords, D-District 8, said the Wall Street bailout was necessary because in the future it would impact Southern Arizona residents' ability to get loans for a new home or car.
Vest said the effects on the real economy has sent consumer confidence plunging to the lowest levels since the 1980s, autos sales are at their lowest since 1983, the unemployment rate is at a 14-year high and homebuilding is at its lowest since 1945.
In Arizona, Vest said the unemployment rate is at 6.1 percent and 5.8 percent in Tucson. He expects that trend to continue, reaching as high as 8 percent in 2009.
The housing market is still in a free-fall, as property values continue to decline, and new home permits have dropped 74 percent in Tucson from three years ago.
In Tucson, population growth is also a fact to consider, as net migration plunged by 6,000 in 2008, making the annual growth rate drop 1.1 percent, which means fewer snowbirds coming to the state to spend money.
In concluding, Vest said the recession will likely extend well into 2009 or beyond, foreclosures and bankruptcies will soar, consumer spending will not lead the country out of recession and the public sector will struggle to have balanced budgets.
The business sector is already being hit in Tucson, as Mervyns and the Shoe Pavilion have closed and KB Toys and several other stores in Park Place Mall are preparing to close for good.
Instead of the big Black Friday sales, this year retailers were really aiming for shoppers after Christmas. With advertisements boasting the biggest sales of the year, retailers said early last week it did not work, and sales are still down.
In the meantime, residents continue to wonder how to deal with finances in tough economic times, and still manage to pay bills and live comfortably.
In fact, according to the American Psychological Association's (APA) 2007 Stress in America survey, money and work are two of the top sources of stress for almost 75 percent of Americans. Add to the mix headlines declaring a looming recession, and many begin to fear they cannot handle any more.
The APA said it's just important to manage stress in tough times as it is to keep finances in order.
Psychologists first recommend that people not panic. While there are unknown effects in every economic downturn, the nation has experienced recessions before.
The best way to avoid stress is to look at financial stressors and create a plan. Write down ways the family can reduce spending, and how to manage the entire family budget more efficiently.
This goes with what economists across the country are also telling residents to do as the health of the economy remains unknown for the next few months or the entire year.
Businessknowledgesource.com, said when times are hard, people worry about losing their jobs, investments going down, retirement accounts being depleted, college funds being used and much more.
Economists said there are 10 steps people can take to assure financial well-being even if the rest of the nation seems to be struggling.
First, people should pay off debts as quickly as possible. The belief is that when times are tough, paying the minimum amount due so there is money left over is a good idea. However, financial advisors agree that if a debt is not paid down, people owe even more, and the toll on everyday life and sanity is huge.
The second tip is to cut all unnecessary expenses.
Evaluate monthly spending and find places to cut back such as in entertainment. Get the smaller cable package, a cheaper cell phone plan, rent fewer movies.
Thirdly, in tough economic times, people are reminded to be more valuable at work. In tough times, people start to worry about job security, to avoid the chopping block, be more pleasant to co-workers, be helpful, be efficient and become as irreplaceable as possible.
The fourth tip is to keep investing, especially in retirement accounts.
Just because the market is down, doesn't mean to stop investing in the future. In fact, many say this is the best time to invest, especially if you have the money to do so, and the time to wait for it to pay off.
The fifth tip is to always have a cash fund. Banks are FDIC insured, and they insure deposits up to $250,0000. However, if a bank does fail, it could take weeks or months to get the money back.
The sixth tip is to reduce energy expenses. It may not be possible to stop using utilities, but you can cut back. Start taking shorter showers, car pool if you can, use natural light and turn the television off when you are not in the room.
The seventh tip is not so much for financial well being, but more for mental health. Advisors say don't look if you can't take it, meaning if you can't handle the news when checking portfolios, just don't look.
The eighth tip is to claim more taxes, which means come March and April you will get a bigger tax return. When times are tough and money is tight, you will appreciate the little extra you get from Uncle Sam.
The ninth tip is to save money. Besides paying down debt, everyone needs a bigger savings account. Try to save enough money to cover three to six months of expenses.
The 10th and final tip is to learn how to tell the difference between wants and needs. Anyone looking to improve their financial outlook, no matter what the economy is like, should learn to be content with what they have.
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