We are officially in a recession! I have written about how I would deal with a recession previously, and also shared the views of one of my company’s founders. I think most of us saw this coming, and a lot of us will just go on quite unaffected as long as we have a source of income. There are some effects I am seeing due to the recession all around me and I feel like I should address them here.
1. Cuts to education in California- Unfortunately I am hearing a lot of news about good teachers being fired all across California and student walking out of schools to participate in protests in the hope of keeping their teachers. It is a pretty difficult situation for everyone, but with 1 in 240 or so homes in foreclosure, the state of California is losing billions in tax revenues. The former budgets made in the flush housing bubble years are just not sustainable anymore. The funding cuts are necessary because I heard that municipal bonds are not selling well these days and there just isn’t enough money. I still think it is stupid to fire good teachers, and I hope it really is the last resort.
2. Devaluing of the dollar - The value of the dollar is plunging around the world. This is going to make travelling quite a bit more expensive for Americans. I know my trip to China later this year will be much more expensive than the past two years. It will also make everything we import more expensive. Since we import almost every thingamajig from China and the Chinese Yuan is 12% higher than last year, I expect household goods will increase in price quite a bit. However, it also makes American exports more attractive so hopefully that will make our economy recover more quickly.
 3. Food prices skyrocketing - This is insane, but last month I picked up pizza dough for 99 cents at Trader Joe’s, and this month it was 1.29! The same item increased 30% in a month. Then I heard on the radio that flour prices are skyrocketing and many bakeries are paying 2 to 4 times what they paid last August for flour. The reason is that wheat supplies dwindled this year and the demand increased. Other foods are also getting more expensive because of increased global competition for food and gas.
I haven’t really heard of massive job loss here in the Silicon Valley…yet. It seems like companies are hoarding tons of cash, and that could be a good thing. Today our CEO said that “difficult economic times are times for great companies to shine”, and I agree with him. Anyway, I feel like my life hasn’t been affected greatly by the current recession, but that may change in the future if food gets more expensive than rent.
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2 comments ↓
We aren’t “officially” in a recession. You linked to one article where one guy says “my personal opinion is that we are in a recession.” The earliest we could know if we are in a recession (defined as two quarters of negative GDP growth) is July.
Thanks to Meg for filling in what I was about to say. There isn’t yet quite enough to say we are in a recession. It is a “recessionary” type of economy, a “bearish market” but not a full fledged recession quite yet.
Do I think we’ll get there? Sure. But its no big deal… its going to be mild at worst.
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