You might just want to hold off on any big ticket purchases.
The economy is in far worse shape than was previously thought. Today the Federal Reserve’s Open Market Committee (FOMC) revealed some sobering facts. Our weak economic recovery is stalling due to global economic problems, businesses are more reluctant than ever to hire, and banks are not lending money.
They also indicated that the Fed interest rates were likely to remain at historic lows for an extended period of time, and that inflation concerns are almost nonexistent. While this may cheer up some investors watching daily stock prices, it is news that portends a grim future for many of us.
Here are my predictions for some key economic elements.
1. We will enter a double dip recession.
2. Housing prices will take another dip.
3. Savings accounts will earn the lowest interest rates in history.
4. Inflation will be contained, but the real cost of living will increase.
5. The stock market will not recover any time soon.
Of all the things on the list, I’m primarily concerned about number 4. We’ve all seen real costs go up in the supermarket; not so much in the prices we pay, but in the diminishing package sizes of the products we buy. The government has a clever way of hiding that from the official Cost of Living Index by calling each reduction a “wash” because the products have allegedly improved, or the daily portion has been reduced. (They have to do this so they can avoid giving cost of living raises to Social Security and pension recipients.) But the worst cost of living increase will have nothing to do with what we buy. It will be from local, state and federal taxes going up significantly to cover the shortfalls resulting from the collapsing economy.
Unfortunately, I don’t have any real solutions to offer. If saving Capitalism were the goal, I know that the Democrats are doing the wrong thing by perpetuating their out-of-control spending. My real fear lies in the fact that their true goal is to transform us into a Socialist nation.
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