We’ve been hearing a lot about how the economy is starting to improve. November saw an increase in consumer spending and confidence, and just yesterday the Federal Reserve expressed some optimism with regard to how things are going with the economy. However, this doesn’t mean that things are all rosy for individuals quite yet. Indeed, many expect the status quo to remain the same. A recent survey saw respondents pretty even split between whether they thought things were going to be the same, worse or better in 2010. But, interestingly, amongst financial industry insiders, the attitude isn’t quite so divided. I recently spoke with Greg Schneider, and executive with Adaptive Planning, a company that helps businesses with forecasting and with long-term planning. A recently survey found that we might actually be headed toward a double dip recession.
“The people closest to the ground on this issue, financial professionals across 25 industries, don’t see things improving that dramatically. 54% expect things to be the same or worse going forward, and 46% expect a W-shaped recovery, meaning that another recessionary dip might be on the way,” Schneider told me in a phone interview.
The survey also reveals that, despite recent good news on the jobs front, things are far from recovery. “Expectations for further reductions in jobs increased. These are industry professionals who report that their companies expect to reduce the workforce. Only 14% of our respondents expect to hire in the next six months,” Schneider continued.
Companies expect to grow their topline, but they expect to do it with cost cutting measures, and not necessarily through increased revenue. And that means that hiring will be on hold for a while. “This attitude could be a drag on economic growth and recovery,” Schneider acknowledged. “It implies that companies will only start adding jobs when the overall economy starts improving.”
Many expect that economic recovery won’t really get underway until after a setback or two early in 2010, and that growth won’t really start until the latter half of 2010, say some other analysts. In the end, it might be foolhardy to expect things to suddenly improve. Indications are that recovery will be slow and fitful. For individuals, this means that it may not be time to abandon the recession spending diet. In fact, you might be better off developing sound financial habits for the future so that you will be prepared for the next recession.