If it Walks Like a Recession, and Talks Like a Recession…

Maybe it’s simply our homegrown optimism, but we Americans have short memories. So short, in fact, it’s become almost commonplace for some of us to refer to the Great Recession as some remote period of history, one that’s safely past.  According to the National Bureau of Economic Research (“the official arbiter of U.S. recessions”) the Great Recession started in December 2007 and ended in June 2009.  But is that all she wrote?

An April 28 Washington Post article gives us good reason to think otherwise. Some unsettling economic indicators are dogging us, and we might be a wee bit too premature when we use the word recovery. That said, the writer of the article goes out of his way not to alarm us and avoids using the word recession. Instead, he chooses to refer to the economy as being in “second gear.”

Make no mistake though; we’re not out of the woods. Businesses are holding back on investing with as much restraint as they did during the financial crisis. And our GDP has grown only a half a percent on an annualized basis in the last quarter.

Many businesses, like airlines and tech companies, are still hesitating to invest in basic equipment, including computers and machinery.  In fact, nonresidential investment, the measure of that type of spending, declined almost six percent in the first quarter, the most severe drop since 2009.  Piling on, following last year’s plunge in oil prices, drillers set a fifty-eight-year record decline of eighty-six percent on expenditures for wells and shafts.

In last Wednesday’s announcement that it was once more putting off raising rates, even the Fed acknowledged the nation’s anemic growth. Under the circumstances, the central bankers’ insistence that they remain optimistic about the economy, and will definitely, absolutely raise rates in the un-pinpointable future is little consolation. It seems nothing they can do will stimulate much-needed inflation.

Neither consumers nor businesses choose to spend. We can only wonder whether, in a last-ditch effort, the Fed will resort to negative interest rates.  After all, Janet Yellen has acknowledged in front of Congress that this unpopular tactic remains a possibility, and we certainly don’t have much further down to go.

Meanwhile, if you’re among the nation’s consumers holding back on spending who can blame you? Why should you shop till you drop, eat out at expensive restaurants and run up credit card bills with abandon when no one can even assure us our economy has truly surfaced from the Great Recession?

Now is the time for vigilance and judicious decisions when it comes to your financial affairs.  One of the best decisions you can make right now is to invest in gold, both to hold personally and to protect your retirement savings. On April 29, the yellow metal closed out the week at a spot price of twelve hundred ninety-four dollars, up twenty-six dollars an ounce.

Although that price is still comparatively affordable, some observers feel once gold breaks the thirteen-hundred-dollar mark, the price will start climbing much faster.  At that point it’ll be like hopping a train that’s just about to leave the station.