US Economy Forecasts

Terrie Hall asked:


EDEN PRAIRIE, MN – (November 4, 2008) With inflation rising and consumer spending continuing to drop, can it really be a good time to buy a franchise?

“Yes,” said FranChoice President Lori Kiser-Block. “While the headlines concentrate on what isn’t working in our economy, there are still plenty of businesses that are thriving. If you know what to look for in a franchise business, you can actually take advantage of some aspects of the current economic environment to lower your start-up costs.

“For example,” said Kiser-Block, “current low interest rates can mean that borrowing money for your purchase will cost you less. A higher unemployment rate means you will have more good employees to choose from to help you run your business. You may also find that you can now buy or rent business property at a better price than you could have in the past.”

The key to finding a viable business in this economy, suggests Kiser-Block, is to choose a business that fulfills a need for consumers that cannot be put off until better times.

“Think about what you can and cannot live without,” said Kiser-Block, “and you’ll have an idea of business that can do well even in a slow economy.”

One example of a franchise business that has continued to prosper includes disaster restoration companies that help a homeowner after a fire, flood, or even a hurricane. When your home is filled with water, you need to take care of it immediately.

“Service businesses tend to be more recession-resistant,” says Kiser-Block, “as they provide something you either can’t or don’t want to do for yourself. Whether it is tax preparation, senior care, child care, or home maintenance, these are services people need.”

Kiser-Block offers these suggestions for starting a business in a shaky economic environment:

·          Pick a recession resistant business, such as one providing a needed service to the community.

·          Look for businesses with low start-up costs. The less you pay to begin the greater your chances of reaching profitability.

·          Don’t discount service businesses because they aren’t “sexy.” They are among the best values among franchises because of their lower entry cost, high demand and good margins.

·          Look for a franchisor that has a very strong executive management team with experience, wisdom and strategic vision in their specific industry.

·          Search for an established franchise with a number of happy franchisees. The more you can learn about the business from those working in it, the better decision you will make. Choosing an established franchise may also lower the risk of your investment.

·          Current franchisees will be your most accurate source of information about a franchise opportunity. Ask how they are doing in the current economy.

·          Financing a new business can be more difficult during a recession. Use the resources available from a business funding specialist (Guidant and FranFund are two examples) if needed, that can help you find the best method of borrowing money for your circumstances.

“If business ownership is something you’ve dreamed about,” said Kiser-Block, “you don’t need to wait for the economy to turn around. Definitely pay attention to trends in business (such as senior care and business that help the environment) but steer clear of franchise fads. If you choose carefully and wisely, your new business could bring you success even in this economic climate.”

About FranChoice

FranChoice is a national network of consultants dedicated to helping consumers find their ideal match in a franchise business. Since 2000, FranChoice consultants have helped over 40,000 people identify and investigate the perfect franchise for them through their free service. For more information, go to www.franchoice.com.

Wendy Maynard asked:


If you’ve been watching the news lately, you may have noticed that the economy is in a bit of a downturn. It’s happened before and it will happen again. During these times, smart businesses adjust their marketing strategies to make sure they will thrive during these slumps. You do not want to allow external circumstances to determine your future. The key is to be strategic, savvy, and streamlined in your campaigns.

For a well-positioned company, an economic recession should not lead to marketing cutbacks. Any time you go into a fearful reactive mode, you are actually moving backwards. Instead, think of this an opportunity for you and it is a great time to get aggressive with your marketing. Marketing is what will make your company recession proof. Since a lot of your competitors will be cutting back, this is your time to really differentiate your business and strengthen your competitive advantage.

Here are tips to help you adjust your marketing in a tough economy:

1. Know what drives your customer in this economy. More than ever, you must understand what drives your target audience and how they are reacting to the current economy. Both consumers and businesses will take more time to make a purchasing decision and they will most likely be a hard negotiator at the point of sale. Buyers are more willing to hold off on making a purchase, and they will rely on the brands that they know well. Therefore, talk to your current customers about their challenges and what they need from you to help them.

2. Keep an eye on your sales. This is a time for careful monitoring and adjusting. Watch your incoming company sales and keep an eye on your project pipeline/future income. If you compare this to past data, you will know what is happening before it actually occurs and you can intensify your marketing efforts to compensate for potential slowdowns. Now more than ever, you want to make sure that you are marketing forward to ensure your pipeline stays full in the coming months.

3. Differentiate yourself and reinforce your brand. When we are in a time when fewer people are buying, competition becomes fierce. Make sure your target audience understands why you are different from your competitors. Let them know why your brand is the best. Treat your best customers with extra TLC because you want them to weather the economic downturn with you. This is a great time to give your VIPs extra value and incentives.

4. Don’t focus on expansion right now; instead focus on what is profitable. Now is not the best time to launch a brand new venture. For example, if you are a chocolate bar company, it’s not a good economy for you to try out a donut line. You don’t want to risk a fall by jumping too far away from your tried-and-true core areas. Instead, take a look at the services and products that are most profitable for your company and vigorously promote these.

5. Focus on relationships and value. Keep marketing your company’s value to your prospects and customers. Because people are spending less, they want the purchases they DO make to be of great value to them. Emphasize reliability, durability, quality, and performance in your promotions. Tell your customers how much you appreciate their business.

6. Ditch awareness-marketing for lead-generating marketing. I am a proponent of building brand awareness through advertising and promotions. But now is not the time for traditional marketing - you can’t afford to waste your dollars on efforts that don’t generate immediate business. Instead, implement marketing that generates quality leads. Be sure to set up tracking systems so you can effectively monitor the results.

Remember, a recession is not the time to get gloomy. Instead it is an opportunity for smart business owners to differentiate their company. In a slowing economy, it is time to maintain or even increase your marketing budget. Stay laser focused on the activities that make your phone ring now and in the coming months.

Manora asked:


The government adapted strict monetary and fiscal policies to control the rate of inflation during this period. Rigid monetary policies were used to limit credit expansion in the private sector. The fiscal policies were mostly the levying of import and export taxes. The export taxes were imposed on some commodities, such as rice and sugar, as a means to control domestic prices. The import tax on raw materials used for manufacturing was reduced. There was also a tax on raw materials used for manufacturing was reduced. There was also a tax rebate for importing raw materials for producing export commodities.

The Fourth Plan (1977-1981) : The Economic Recovery Period

During the Third Economic and Social Development Plan, Thailand was affected by the world economic fluctuations as were other countries. Regional, political instability also acted to weaken the Thai economy, as many neighboring countries changed from democratic to socialist countries. This resulted in investors losing confidence in Thailand. The consequence was a higher rate of unemployment.

By the end of the Third Plan, inequitable income distribution was a major problem. Therefore, one of the main objectives in the Fourth Plan was to distribute economic growth and social services to the remote regions of the to country. The population was targeted to increase at rate 2.3 percent a year. It was expected that this rate of growth was appropriate for cohabitation with the existing natural resources and would be suitable for economic development.

The Fourth Plan was set to be an indicative plan instead of allocative plan, as all earlier plans were. This indicative plan was intended to be a practical guideline for government agencies to improve their policies and set up practical objectives. The Fourth Plan was designed to resolve the economic recession and to maintain economic stabilization. It also intended to solve the basic economic and structural problems. It was planned not only to stimulate economic growth but also to reduce the economic inequality in society.

Concerning disparities in income distribution, the Fourth Plan was unable to find a solution to this problem. The per capital income in the agricultural sector was 5 times lower than manufacturing and commercial sectors, and 2 times lower than the service sector. The people in the Northeastern part of Thailand suffered the most poverty. Per capita income in Northeastern Thailand was five to seven times lower than in Bangkok in 1981. The proportion of regional production relative to GDP declined from 15 percent in 1976 to 14.3 percent in 1981.

With respect to social services, toward the end of the Fourth Plan, the rate of population growth was reduced to 2.2 percent. The government was unable to meet the targeted goals for provided were close to the goal, but not in all regions of the country.

Overall, the Fourth Plan was more successful than the Third Plan. The GDP increased at a rate of 7.5 percent a year. This high rate of growth was the result of attempting to maintain an economic stabilization policy to fight worldwide economic fluctuation. The government increased public investment spending from the target set at 14.6 percent to 24.8 percent a year. Economic expansion on terms of production sectors showed a higher growth rate than the target set in almost every sector except for agricultural and manufacturing sectors. The agricultural sector grew less than anticipated in the plan because of the limited planning area and the deterioration quality of planting soil. The manufacturing sector was curbed by the world wide economic recession so that the export of manufactured goods during the Fourth Plan was not as high as the Third Plan.

John M. Norquay asked:


The old saying “History doesn’t always repeat itself, but often rhymes”, is based more on fact than fiction. By studying the US Economic Recession History, you should better understand how current recessions may affect your financial life today.

I focus on recessions simply because they have a dramatic effect on 401k balances and investments in general. During the last recession, which was officially from March of 2001 through November 2001, the major market indexes plummeted. The Nasdaq Index declined over 70% from it’s high within a year surrounding the recession. This index still hasn’t recovered. It is still only half of where it once was.

Could you have avoided this downfall by studying the US Economic Recession History? Maybe, but maybe not. Let’s look at the problem. The National Bureau of Economic Research (NBER) is the official agency that determines when recessions begin and end in history. Since recessions have such a detrimental effect on our investments, wouldn’t it be nice if they would notify us when one is beginning? Yes it would, but they don’t. The Nasdaq Index lost over 43% from its high before the NBER determined we were in our last recession. It took them 9 months after the beginning of the recession to announce it had begun. Is this a fluke? Unfortunately not. The official notification of the beginning of the last 4 recessions came an average of 228 days after they had already begun. This is an 8 month delay.

The way numbers work, if you lose 50% of your portfolio, you must earn 100% just to break even. If you had $100,000 and lost 50% ($50,000), you are left with $50,000. You must double this (100%) in order to break even. This is why it seems to be twice as hard to regain money after losing it. It took the Dow Industrial Index and S&P 500 Index around 6 years to get back to even after the last recession.

Let’s pretend you’ve lost 43% of your portfolio and are determined NOT to lose any more. You sell your stock funds and put your account into the safety of the money market. Your account is now safe for the rest of the recession. Will knowing the US Economic Recession History help you determine when the recession is over? Once the recession is over, you definitely want to move back into stocks so that you don’t miss the next increase in the market. After all, you need to make almost 100% just to break even!

NBER announced the last recession was over on July 17, 2003. Unfortunately they announced it was over in November of 2001! Yes they didn’t determine the last recession was over until nearly 2 years later. Had you had your investments strapped down for the winter winds of recession, you could have missed the excellent recovery period that typically follow recessions. The end of the last 4 recessions were officially announced an average of 522 days (17 months) after they were over.

Studying the US Economic Recession History may be helpful for some, but I don’t find it very helpful in managing investment portfolios. I find that tracking Supply vs. Demand in the investment markets is a much better way to protect assets. When supply begins to outweigh demand, simply change the portfolio to a more conservative stance. This usually happens near the beginning of recessions and you have plenty of time to switch your portfolio to safety. The opposite occurs near the end of recessions. Demand shows back up and you begin to change the portfolio to one of moderate risk.

The upside to recessions is the fact that periods of expansion last about 5 times longer than recessionary periods. There were 10 Recessionary cycles since 1945. The recession side of these cycles lasted on average 10 months. The expansion side lasted on average 57 months. If you can protect your money during the 10 recessionary months you won’t have to spend a lot of the expansion months trying to get back to even. You can instead be exploring new highs for the portfolio.