Friday, August 26, 2011

When to Recognize Our Economies Are Recovering

Even after a series of bailout plans, and new stimulus plans by our Governments, most economists and business gurus agree that we have not hit the road to the bottom yet. How do we know when we have started a sustainable economic recovery?

Our economy is being restructured, after the crash of 2008. This means ruminants of the old economy are going to naturally die out, and then be replaced by the new. This takes time, and until we hit the road to the bottom, we will not see the positive changes of our new Economy.

1. Bankruptcies
Business bankruptcies will reach their peak, and then we will see recovery when these bankruptcies start to decline in numbers, whilst new business start-ups increase in volume.

2. The Banking Industry
Our Banks will settle down to doing business 'as normal.' whether they are State or private Banks. Once banks are being sold again to private buyers, our economies are recovering.

3. Stock Markets
Our Stock Markets will naturally reach the bottom. Some shares will still decline, but once new companies start seeing increases in their share values, our economies are recovering.

4. Unemployment
Official and Hidden unemployment figures reach their peak, and then slowly decline without any State re-adjustment of the way unemployment is measured. Once a real decline in unemployment is proved, then our economy is on the road to recovery.

5. Housing Prices
Housing prices should reach their real market value, according to the real condition of the economy. This could be uneven, as areas harder hit by the economic depression, will have lower house prices, whilst areas recovering should have more stable housing prices.

6. Consumer Confidence
Our Economies are primarily consumer economies, and one of the reasons it collapsed was because consumers borrowed and spent more than they could afford. Once consumers start to shop again, confidence will grow, but if we see wholesale stores and ecommerce websites closing, then we have not reached the end of the old economy.

7. Politics
Our political parties will begin to have more conservative leaders like they did in the boom years. Socially conservative leaders that are there to keep the economy running rather than spend time fixing its problems. If we see the growth of radical politics, then we have not yet reached the bottom.

Recognizing when the economy reaches the bottom could be the difference between thriving again and surviving. Those who seize the opportunities as it hits the bottom could see their wealth grow again, quickly.

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