Fri 18 Aug 2006
Recent news reports suggest that the economy is softening. Of course, Wall Street closely watches the Federal Reserve… and the Federal Reserve closely watches the statistics… and the statistics represent the actions of the consumer… and the consumer closely watches Wall Street.
I read once about a business owner who was asked how he was being affected by the recession occurring at the time. The business owner said that he had chosen not to participate in the recession and his positive attitude helped keep his business going even during rocky times.
Ask an investment advisor or an economist about what can help end an economic downturn and the answer may surprise you (and if you are a business owner, it may even thrill you). The answer is: spend money.
One of the biggest reasons that economic downturns occur is because people suspect that an economic downturn is imminent so they hang onto their money and spend less. The result is that it becomes a self-fulfilled prophecy: people spend less so there is less need for products which, in turn, means that there is less need for manufacturers to produce… so layoffs occur… which, in turn, scares people into hanging onto their money further.
There may be suggestions that an economic downturn is imminent… fight back by spending more and encouraging your customers to spend more, too!