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Two thousand nine is proving to be

a dramatic inflection point in U.S. economic history. The trillion

dollar government economic stimulus package, impending bankruptcies

in the domestic auto industry and unemployment rates approaching 10

percent are unprecedented events in our recent history.      

As we approach mid-year, it

appears that the Obama Administration and the Federal Reserve have

stabilized the financial markets and ended their free

fall. Chrysler and General Motors are going through the painful

reorganizations that probably should have taken place years ago.

Finally, the fallout from this recession is hitting middle America

in terms of slow business growth, state and local government budget

cuts and very few “help wanted” signs. Generally, economic

forecasters predict an end of the current recession later this year

with slow growth over the next two to three years.

What relevance do these forecasts

have for most of us that are dealing with the everyday realities of

a job, family, bills and stretched resources? Well, let’s look more

closely at some of the economic indicators and how they might

relate to our financial situation.




The Economy- The

U.S. Economy is most commonly measured by GDP- Gross Domestic

Product, which is the total measure of all goods and services

produced. The National Bureau of Economic Research (NBER), on

December 1, 2008, finally declared that the U.S. economy had been

in a recession since December of 2007. GDP for the first quarter of

2009 was -6.1 percent. The second and third quarters are forecast

to be slightly negative, with slightly positive growth in the

fourth quarter.  

Your Economy- For

2009, what is your projected FGP- Family Gross Product, which would

include gross income, education/training and service to others and

the community? Do you forecast your FGP to increase for 2009? What

are some ways that you could increase your family’s output and


Unemployment- The

U.S. unemployment rate for the first quarter of 2009 was 8.1

percent and is forecast to increase to above 10 percent by year end

and remain at that level through 2010.

Your Employment-

What are the prospects for your family members’ employment during

2009? Are any of your jobs at risk? Are there any prospects for

promotions? How are your family members improving their skills for

future job opportunities? Are resumes up to date?

Interest Rates-

The consensus forecast is that the Federal Reserve will continue to

keep short term rates low for the remainder of 2009 and well into

2010 to spur economic growth. The current Federal Funds rate is

0.25 percent. 

Your Interest

Rates- As a borrower, you may see lower credit card, auto

and mortgage interest rates, however, the qualification for loans

may be tighter. This may mean higher down payments and tougher

terms. How can you most effectively reduce your interest costs in

2009? Can you payoff a significant portion of your credit card

debt? If you have an adjustable rate mortgage, would it make sense

to convert to a fixed rate mortgage at this time?

The Stock Market-

The S&P 500 Index is near breakeven for 2009, with continued

higher than normal volatility. (Investors cannot invest directly in

and index). Many stock analysts feel that the market has bottomed

out and will continue a gradual climb into positive territory for

the remainder of the year. Corporate profits will continue to be

under pressure because of the overall slow economic growth. Quality

companies with strong balance sheets may have the best growth

prospects over the next several quarters.

Your Investments-

How are your investments performing during 2009? Is your portfolio

sufficiently diversified or do you have significant concentration

in one investment or company stock? Are you saving and investing

enough to meet your long term goals?

The U.S. economy should bottom out

and begin to recover by the end of 2009. However, because of the

depth of the recession and business restructuring, we may be

plagued with slow growth and high unemployment over the next couple

of years. It is therefore important that we create our family

budgets and family financial plans. “Failing to plan is a sure plan

to fail.”         



Wachovia Economics Group, Monthly

Outlook, May 13, 2000


“font-size: 10pt”>Michael G. Shinn, CFP, Registered Representative

and Investment Adviser Representative of securities and investment

advisory services offered through Financial Network Investment

Corporation, member SIPC. Visit

“http://www.shinnfinancial.com”>www.shinnfinancial.com for more

information or to send your comments or questions to



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