The US Economy Shows Some Positive Signs: Are You Ready for an Economic Recovery?

The last two weeks have been filled with positive news about the economy. It all started when several of the major banks announced that they generated a profit during the first two months of this year. Then, General Motors announced that it would not need to take the $2 billion bailout loan from the government that was scheduled for March. The economic data also turned positive as housing starts, existing home sales, and new home sales all increased last month and the initial claims for unemployment compensation decreased.

All of this positive news does not mean that we are out of the woods just yet. There has been plenty of bad economic data reported recently as well. However, it may be a sign that the recession will not be as long or as severe as many people predicted. Therefore, this may be a good time to review what you can do to prepare your finances for an economic recovery. 

1. Refinance your mortgage. Interest rates typically decline during an economic recession and increase after an economic recovery. Mortgage rates for conforming mortgages are currently near all-time lows. This may be a good time to refinance before the economy improves and rates begin to increase.
2. Keep contributing to your retirement accounts. Economic recessions and stock market declines tend to go hand-in-hand. Unfortunately, when many people see the economy weaken and their account values decline they stop contributing to their retirement plans. This causes them to miss out on the opportunity to buy into the stock market while prices are low.
3. Go shopping. When the economy is in recession many companies cut prices in an effort to entice their customers to buy. This could mean big savings if you are in the market for a car, television, furniture, or other big ticket items and have saved the money to pay for them.
4. Convert your traditional IRA to a Roth IRA. The unfortunate reality of the current recession is that many people will earn less income this year than they did last year. The good news is that lower income likely means less income tax. If your income is likely to decrease this year you may be eligible to convert the money that is currently invested in your traditional IRA to a Roth IRA and pay little or no tax.
5. Sell your gold. Many investors view gold as a safe-haven investment. They purchase gold during recessions and then sell when the economy recovers. During the current recession the price of gold has increased substantially, possibly making this a good time to sell.
6. Find a qualified financial planner. An economic recession can be a good time to seek the services of a well qualified financial planner. You want a planner who will be there for you in good times and bad. So why not hire a planner when you need one most, during the bad times. A good financial planner will be able to help you assess your current financial situation and plan for the future, which includes preparing for an economic recovery. You can find a financial planner near you here by clicking “Find a Planner”.

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Posted by Chase Armer on Apr 2 2009. Filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.