CHESSNOID

The US economy is starting to see signs that indicate that we are beginning to slow down. These are the 3 main headlines in business news for the day:

• Payrolls Increase 18,000, Less Than Estimated; Jobless Rate Climbs to 5%

• U.S. Stocks Decline as Job Data Signal U.S. Growth Is Slowing; Intel Drops

• Fed Raises Next Two Emergency Sales to $30 Billion in Bid to Add Liquidity

Many investors are surprised to see these figures. The federal reserve is starting to become more reactive to the news. The stock market is not experiencing the January effect so far this year. The market closed extremely weak today.

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I continue to read many analysts reports about the current state of economy and notice more are starting to change their tune as different reports come out. Many are not stating that the economy is getting slower and 2008 will definitely be the start of a recession. When I read different blogs and their forecasts, it seems even more gloomier. Many are predicting hard times worse than the the Great Depression. I used to dismiss this idea thinking our economy is much more different now than back then. Lately, I have started thinking it may actually be possible considering we have 3 major crises going on simultaneously: the War in Iraq, the Housing Bust and Credit Crunch, and of course all time price records of Crude Oil. Many investors see this on the news almost on a daily basis and may have become numb to the headlines, but that still doesn’t make their true effects disappear.

So many other countries are now dependent on our economy that they too will be brought down by our slowing economy. It is hard to believe we are headed in this direction in our economy when we are so technologically advanced now. The only things we can do if we believe things are headed down is to stay liquid in assets, eliminate debt, and become frugal with our money. We should probably be doing this all the time, but in hard times I think it is essential to survive.

I remember the last downturn in the housing market and dot com crash. Once everything was beaten down to amazingly low prices, there were deals to be had everywhere. I think this time will be no different and history will repeat itself. Abundant opportunities will be awaiting us in a few quarters after all the market excesses are eliminated and the business cycle starts to point up again.