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COMMENTARY | According to an article in CNNMoney, at least one leading economist believes a new recession is on the horizon. I have not heard too many economists talk lately about a double-dip recession, possibly because of the recent stock market rally.
I am not preparing for another recession . That would be like preparing for a thunder storm instead of a hurricane. I fully expect there will be another Great Depression by next year. I'm preparing for the worst possible scenario.
Getting through the political year
Many experts say the stock market performance can predict who wins the elections. I believe the economy will enjoy a brief reprieve from economic problems during this political year. Political ad spending should pump money into the economy this year. It was time for a bull market rally. However, I don't think the stock market rally will continue into next year.
Sparking a new financial meltdown
According to Lakshman Achuthan with the Economic Cycle Research Institute, economic growth has slowed, making a recession inevitable. While some people expected high gas prices to spark a new financial meltdown, it's not going to take anything to trigger it at this point, he says. Achuthan predicts the recession will unfold by late summer. He calls the downturn a "new recession" rather than a double-dip recession because enough time has passed since the Great Recession concluded in 2009.
Trying to prepare for hard times
Call it a double-dip recession or a new recession, for some people it feels more like an economic depression. For my family, the most difficult economic challenge ahead is dealing with the rising costs of college tuition. I am preparing for hard times by doubling my personal savings rate and keeping my investments diversified. I also keep my job and technological skills as current as possible.
I've never lived through a Great Depression, but I remember the stories my grandparents told of those difficult times. My grandmother said her family did not suffer as much during the Great Depression because everyone had college degrees. No matter how expensive a college education becomes, I remember how much of an asset it was to my ancestors. We will continue to save for our sons' college education so they can be prepared for the new recession or even darker financial times.