Are We in a Recession?

"No good news today on the economic front. Consumer confidence plunged, the wholesale inflation rate soared, the number of homes being foreclosed jumped, home prices fell sharply and a report predicts big increases in health care costs." This was the lead paragraph in a February 26 Associated Press article.

Technically, the economy isn't in a recession until there are two consecutive quarters with negative growth of the Gross Domestic Product. We aren't there yet, but the economy is bad in the many ways noted above. Even legendary investor Warren Buffett seemed to think that we are in a recession.

The good news is that President Bush doesn't think we are in a recession. Hewouldn't lie to the American people, would he? And his administration would never manipulate government statistics for political purposes, would it?

Perhaps I'm getting a little sarcastic here, but the question remains: Are we in a recession? Based on recently conversations, real estate troubles, and the stock market decline, I'd have to say "yes." It's a recession if Americans think it'sone.

Now that we've named it, what do we do? The options are to hang in there and wait for the stock market and the economy to enter a positive cycle as it always has, or to get out of the market and park your cash at 2% in a CD (now that they've cut interest rates). You can also invest in silver and gold since they've done so well lately, but that means you are selling stocks when they are low and buying a commodity when it's high. Unless you have unusually good timing, selling low and buying high isn't a good strategy.

So, hang in there and try not to panic. It's not easy, especially when you see scary headlines daily, but unless it IS different this time, being patient is the best strategy.