Despite my recent completion of NYU Stern's comprehensive intro to economics class "FIRMS AND MARKETS," even i sometimes struggle with the complex economic theories and indicators used to judge the health of the economy. To help us out, i have enlisted the expertise of Jennifer Lathrop, an analyst in our research department who will explain all (pictured right) . She has kindly put together the following user-friendly post to make economic theory a little clearer, a little more relevant, and a little funnier. Take it away Jen.
In the Real Estate business we have been eager for the end of the recession before it was even declared an official recession. Crystal balls quickly became wishing wells and we began daily hunts for signs that things are getting better, something, anything. We all know that you can never really tell where the bottom is until after it has passed but that does little to quench the anxiety. We still want to know: What are the signs that a recession is over?
There are some official markers. Job loss is halted, consumer confidence index grows, the stock market stabilizes, and toxic assets are cleared off the books for a fresh and hopefully more mature start. We have been seeing some great signs. Jim Kramer amid all his yelling said that it is the bottom, federal interest rates are still at an all time low (again as mentioned in earlier posts- now is a good time to buy), banks have their bailouts and are working through toxic assets, and the media got bored with scaring people about real estate and has moved onto pigs.
An article by MSN gave 5 signs the recession is ending, including the never failing and fully scientific “cupcake indicator.” http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/5-signs-of-the-recessions-end.aspx
Really? Cupcakes? The cupcake indicator claims that people are more willing to indulge in small luxuries when the economy is good and we can monitor this indulgence by watching cupcake sales. It makes sense…kind of. But who has time to monitor cupcake sales and what if you don’t like cupcakes? To solve these dilemmas I made my own list of 5 indicators to watch:
1. Fluffy the cat is back to being fluffy. You’ll know it’s over when you can finally budget for the occasional grooming instead of the do-it-at-home variety in your 8x8 walkup (it looked bigger on the floor plan). I don’t know if the money saved was worth it. You never know what kind of retaliation Fluffy has planned while you are sleeping.
2. Ramón noodle sales revenue shows a decrease quarter over quarter. What was once primarily the staple of starving college freshman became a go-to meal during the recession at 50 cents a pack. Interestingly, all the money saved on food went directly to the increased amount of alcohol consumed while “networking” so perhaps this wasn’t the smartest frugal move. Regardless, when people begin trading up to Easy Mac (retail approx $3) we will know we are almost in the clear.
3. Your unemployed friend who has been crashing on your couch finally moves to their own place. It seems like a cause for celebration but upon further review you notice you are now missing your pizza pan, your “it-bag” from last season (you couldn’t afford this season’s bag), and Fluffy…In a way it was cheaper to have her stay.
4. The “it’s the thought that counts” gift for your friend’s birthday flops…hard. When the recession ends so does the appropriateness of hand made, home made gifts. If only her birthday had been 3 weeks earlier - she would have loved the dried Ramón noodle picture frame you made her.
5. Your landlord has morphed back into the person who is never around until its time to collect the rent and who doesn’t care if your ceiling is falling down, just like they were before the recession. Not only that, but now they aren’t calling every month to lower your rent if only you’ll stay the remainder of your lease.
Geez, I’m starting to get nostalgic about the “good ol’ days” of the recession.
Time to bake more cupcakes!
There are some official markers. Job loss is halted, consumer confidence index grows, the stock market stabilizes, and toxic assets are cleared off the books for a fresh and hopefully more mature start. We have been seeing some great signs. Jim Kramer amid all his yelling said that it is the bottom, federal interest rates are still at an all time low (again as mentioned in earlier posts- now is a good time to buy), banks have their bailouts and are working through toxic assets, and the media got bored with scaring people about real estate and has moved onto pigs.
An article by MSN gave 5 signs the recession is ending, including the never failing and fully scientific “cupcake indicator.” http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/5-signs-of-the-recessions-end.aspx
Really? Cupcakes? The cupcake indicator claims that people are more willing to indulge in small luxuries when the economy is good and we can monitor this indulgence by watching cupcake sales. It makes sense…kind of. But who has time to monitor cupcake sales and what if you don’t like cupcakes? To solve these dilemmas I made my own list of 5 indicators to watch:
1. Fluffy the cat is back to being fluffy. You’ll know it’s over when you can finally budget for the occasional grooming instead of the do-it-at-home variety in your 8x8 walkup (it looked bigger on the floor plan). I don’t know if the money saved was worth it. You never know what kind of retaliation Fluffy has planned while you are sleeping.
2. Ramón noodle sales revenue shows a decrease quarter over quarter. What was once primarily the staple of starving college freshman became a go-to meal during the recession at 50 cents a pack. Interestingly, all the money saved on food went directly to the increased amount of alcohol consumed while “networking” so perhaps this wasn’t the smartest frugal move. Regardless, when people begin trading up to Easy Mac (retail approx $3) we will know we are almost in the clear.
3. Your unemployed friend who has been crashing on your couch finally moves to their own place. It seems like a cause for celebration but upon further review you notice you are now missing your pizza pan, your “it-bag” from last season (you couldn’t afford this season’s bag), and Fluffy…In a way it was cheaper to have her stay.
4. The “it’s the thought that counts” gift for your friend’s birthday flops…hard. When the recession ends so does the appropriateness of hand made, home made gifts. If only her birthday had been 3 weeks earlier - she would have loved the dried Ramón noodle picture frame you made her.
5. Your landlord has morphed back into the person who is never around until its time to collect the rent and who doesn’t care if your ceiling is falling down, just like they were before the recession. Not only that, but now they aren’t calling every month to lower your rent if only you’ll stay the remainder of your lease.
Geez, I’m starting to get nostalgic about the “good ol’ days” of the recession.
Time to bake more cupcakes!
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