Where do you see our economy going in 5 years?

[marimara]

Where do you see our economy/country going in 5 years? Who/where do you read to validate your opinion? (blogs, websites, books, etc.)

Are any of you doing any preparations if you believe bad times are coming?


We are considering a big investment right now and the main reason is that we are worried about hyperinflation or even deflation (or fill in the blank) or our savings not having as much purchasing power in 5 years or so. We have an opportunity to buy a future home for cash right now but would have to rent it out, since we couldn't live there for at least 5 years. I am just about paralyzed by this decision. I feel like if I could have a crystal ball I could make a decision

[fierrbugg]

Ok, keeping in mind that my mom is Mormon and my dad is a conspiracy theorist (seriously most of the conspiracies Mel Gibson talked about in that movie, I'd heard throughout my life), and food storage has been beaten into my head since a very young age, I do worry about it. I spent the first few years of my marriage rebelling against my upbringing, but then lost my job in July and realized it was probably a good idea anyway. Right now we're working on doing simple things like having some extra food in storage (although never enough, ). We are even working on getting bug-out bags together for us and the dogs. Great for camping or you know - just in case. Dh is especially worried about gas going up since he's the soul earner right now and he works an 80 mile roundtrip from home - so we're doing the 'easily liquidatable reserves' that Dave Ramsay reccomends too. One of the magazines that I love is Backwoods Home.

I grew up in a tiny town in IL and I'd like to get back to a country town. Right now we live in a suburb of Phoenix, dh grew up here. While I do love the advantages of big city life - I miss living in a small town and I think we may end up moving somewhere rural in the next few years. That's probably our plan - move back where there aren't any HOA's and we can do things like get to know our neighbors, have chickens and goats and a decent sized garden.

[Traci mom23boys]

You could check out these blogs:

http://scienceblogs.com/casaubonsbook/

http://theautomaticearth.blogspot.com/

http://thearchdruidreport.blogspot.com/


blessings on your difficult decisions,

~traci

[velochic]

I don't worry about hyperinflation. Hyperinflation, the realistic definition of it, is something like 50% increase per month. In recent history that has happened in only a handful of countries. I lived in Russia during the 90's and even there, it wasn't "hyperinflation". It was simply high inflation. Dh is from Turkey and they had high inflation there in the late 90's/early 2000s. They had to keep reprinting money dropping zeros off of the lira. Again, just high inflation.

I actually worry more about a spiraling deflationary period, which can be truly disastrous. I read Sharon Astyk regularly and I've read Chris Martenson. Sorry, I just don't think that we're going to see hyperinflation in my lifetime.

I also don't fear economic "collapse", however, I think it's prudent to prepare for hard times, which deflation or high inflation would bring about. We do prepare, although really only in the sense of food, personal supplies, smart and diverse investments and no debt... not the other stuff that most "survivalists" stockpile (we're pacifists and are not religious).

[marimara]

I edited the original title so I could get more responses related to the information I'm looking for. Ok, so I don't know, and neither does anyone else, if it's going to inflationary/hyperinflationary/deflationary. But what I am interested is, what do you all think?

I'm talking prices of things, the state of things:
like price of a gallon of gas
gallon of milk
barrel of oil
housing prices
prices of food
availability of food
etc.

How do you imagine life will be like in your average big city, med city, small town, rural towns, etc.?

[Hannah32]

I think we're in for a "lost decade" in the US. The standard of living for the middle class will continue its stagnation and decline. The best solution as I can see it now is to be saving at least 20% of take home pay and keeping expenses as low as possible. I feel that debt-free living is a much for these times too.

I'm not particularly worried about inflation. I feel deflation is a bigger risk at this point in time.

I tend to read mainstream liberal/progressive economists, like Krugman, DeLong etc.

[Poddi]

I don't know much about economic predictions. All we've been trying to do is pay off our house in the next few years, and move investments to more secure options. So we'd be more prepared in case of job loss.

I figured if high inflation or whatever happens it affects everybody, not just us. Everyone will have less purchasing power. We'll try to keep some staples on hand, like a few weeks worth of stuff, but not too much. Storage cost money and energy to keep track of them and rotate them. Plus it almost doesn't feel right to hog too much of everything. I've lived very lean life for many years before, so I'm not afraid of having less really.

[yukookoo]

im in the same position somewhat. we can buy a home with cash but im looking around at home prices and they are so inflated we are up at 2005 prices or above here in my area, so i recently gave up. there are so many houses for sale I've never seen anything like it! I know its summer coming up and a busy time but houses are on the market that havent been in 50 years or more, historical places owned by family for 100 years! several of them. it's just crazy and everything lsited so high in every market things are selling right now here

sooo we decided to wait at least a year and see where things go up or down. Dh is an appraiser and knows the market pretty well I think and he predicts (much like many) that housing will drop over the next few years before we really start to see increase. People are buying with loans not cash there are still a ton of fha mortgages and rates are low right now but that will change in the future i assume dropping prices.

I honestly think right now is a bad time to buy a house, its so uncertain.

We are considering in the next year or so lookign at buying land and building a nice organic, toxic free as possible home on it. it ends up being cheaper that way but of course is a pita..

as for thenext 5 years who knows, this bubble hasnt truelly burst thanks to the gov propping it up with air, or taping it up or something whatever fits the analogy haha but air is slowly still leaking out imo. gov has to deal with deficits at some point and i dunno this level of living is still unsustainable so it will burst for real at some point maybe not in the next 5 years though maybe more like 20 or more.

[A&A]

I read the New York Times. They publish articles by Krugman and others. Here's an interesting one about peak oil:

http://www.nytimes.com/2010/06/06/us/06peak.html?ref=us

[A&A]

Also, I wouldn't be a landlord. No one is going to care for your home as much as you would. We were landlord's for my MIL's place while she moved to another state for a couple of years (long story) and it was one huge headache.

[marimara]

yukookoo-

yeah, it's a hard decision to make right now. the areas we are looking are Florida where prices are really low right now. But with the oil spill looming it's looking like FL might just fall apart. I don't know. I'm from Florida and always wanted to have a house near the beach but I'm not sure if that's possible anymore.

The other possibility we are looking at is buying some land and holding it until dh retires from Air Force and then building a non toxic home as well. We are looking at house kits and what not. There are some cool info out there about SIP (structural insulated panels) (pre-built and assembled on site) and some of them are filled with Soy based insulation. neato. Anyhoo, this got off topic but wanted to say

maybe I'll start a new thread about future homesteaders, and buying land ......

[A&A]

This article discusses one factor in prices going up:

http://www.nytimes.com/2010/06/08/bu...8wages.html?hp

[Juvysen]

[amyamanda]

Originally Posted by marimara

I'm talking prices of things, the state of things:
like price of a gallon of gas
gallon of milk
barrel of oil
housing prices
prices of food
availability of food
etc.

The US is long overdue for a date with austerity. Will it affect us individually? I say yes. Gas prices will go up. Oil prices will go up. Food prices will go up. Luxury items that we take for granted, even things like special foods, will either go up in price, become more scarce, or both. Imports will go up in price and become less available in general. Housing prices will continue to drop for at least a few years, but loans will be harder to get. There may be food shortages that we would not have had several years ago - if our country has a grower or producer shortage, we can't necessarily just import the difference to make up the shortfall, and some people will be doing without.

I think there will be a series of short, sharp shocks to our economic/financial system, and in between them, we will gradually get used to a new and less fat reality, so it may not seem like things are changing as dramatically as they will seem when we look back over five or ten or twenty years.

Google Chris Martenson - his website is a really good resource for this kind of thinking.

As for how it will vary by location, I think it's easy enough to speculate. Rural vs. urban will have perhaps opposite challenges and benefits. With oil prices and gas prices rising, rurals and suburbanites will find transportation more expensive and precious. I am hoping this will spur a resurgence of public transportation in areas that do not currently have it.

I think our country's infrastructure will suffer - roads will not be maintained as well, power outages will take longer to resolve, rolling brownouts/blackouts will increase, aging sewer and water pipes will be more prone to bursting, more bridges may be closed instead of repaired, etc. So those kinds of things may affect urbans and suburbanites more than rurals. Rurals who have gardens, well water, septic systems, dirt roads, and are off-grid may not feel that pinch as much.

In your shoes I would buy the house with cash, rent it out for five years, and move in five years. Better would be to buy your house and move there now and stay there for life, but I think your plan is a reasonable alternative if you are willing to be a landlord for five years. Choose your tenants carefully. I think it will still be a good situation in five years, but maybe not ten or twenty - best to be in that forever paid-for home by then.

IMO.

[sweetjasmine]

[Usually Curious]

When I am feeling optimistic I see higher prices and even higher unemployment. Without the current welfar programs we'd already see bread and soup lines like they had during the Great Depression. When I am in uber-doomer mode I see Civil War II.

We will be in this 'recession' for another decade. The government will monkey with the numbers and definitions of terms to keep us in the dark, though.

[sweetjasmine]

Originally Posted by Usually Curious

<snip>
We will be in this 'recession' for another decade. The government will monkey with the numbers and definitions of terms to keep us in the dark, though.

I agree, that's just what governments do under the guise of "protecting" their people. We may have a lost decade or two like Japan.

[cymbeline]

I agree with others - I think we're looking at what some are calling the "catastrophic convergence" - the idea that peak oil + global warming + credit crisis/global economic transition = social turmoil.

I also read the NYT and Reuters, and it is pretty clear that there are voices trying to warn us about the potential effects of our current culture of consumption, but the vast majority of people are not listening. Even I have a hard time listening, because the messages are often doom and gloom, but the fact is that there has been little personal hardship in my lifetime, and if things were to get worse very suddenly, I wouldn't have much to fall back on. I wasn't raised to save or conserve or be prudent, so I'm trying to force myself to learn now. The last few years, if a prologue, have been sobering to say the least. We have changed the way we live dramatically.

So... what I'm hearing is that we (meaning the USA) will begin to experience oil shortages in the next 5-10 years, but it won't be like in the 1970's when it was due to political turmoil, it will be because of depletion, which will cause gas and oil prices to suddenly and dramatically rise -- which could cause hyperinflation on some items (transportation obviously, but also energy in general) and inflation on everything else. We will also see certain things devalue dramatically -- such as cars and personal vehicles... but also, I think, suburban or even rural homes that require personal transportation to get to hospitals, etc. And there will be more environmental-toxin-related illnesses, putting a lot of pressure on the medical system. I really hope the Obama administration steps up the pressure on citizens to take personal action in terms of conservation and self-sacrifice. Right now, I don't see many people taking it seriously, but I do have hope that if we really and truly rallied, we could make the transition a lot less painful.

We don't have a lot of cash, so we're concentrating on paying down our mortgage in the next 5 years so that, at the very least, we can convert it into cash if we needed to do so. We live in a city, close to public transportation, there is a general market in walking distance, and our neighborhood operates a CSA program (very Food Not Lawns). If I were in your shoes, I would not purchase a home right now unless the community kicks ass. Worst case scenario, things are dramatically worse than they are now, and we will really need our hyper-local economies to be strong, know what I mean?

[marimara]

Thanks for the input everyone. I want to see this thread continue as I'm very interested in this topic. We have NOT bought any house or property at this point. We stopped looking at houses. Just waiting to see what is going with this oil spill and Florida since that is one of our options.

The way I see things going is similar to the last post.

Increasing costs of transportation fuel, electricity, heating fuel, and even other things like food and water, yes even water. As environmental degradation continues unchecked our water sources will become increasingly toxic.

Continued fall of housing market, prices of automobiles will continue to fall.
There might be pockets of areas, in walkable communities or urban places where public transportation is, that may increase in price.

Increasing costs of flying on an airline, some airlines will shut down. Trains may pick up the slack.

Continued political aggression and separation, possibly leading to states seceeding, in the distant future.

Continued military aggression on our part, mostly to secure oil and water supplies, though it will most likely be disguised as other reasons.

As deep water drilling for oil takes a big hit because of the Gulf Oil spill, there will be a more aggressive move towards shale and tar sands. Which cause lots of environmental degradation of their own. So I agree, more people and animals sick and dying from environmental damage.

I think that the western world (esp U.S.) will fight tooth and claw to keep our lifestyle. People will go to greater measures to sustain their vehicles, homes, lifestyles (esp the middle upper class and upper class). More bankruptcies, foreclosures, and debt issues on the rise. Most people are waiting for the govt to "fix" things and don't do anything real in their own lives to make their situation better (high mortgage rates, house won't sell, gas costs too much, electricity rates risen, etc.).

More unemployment and homelessness, deeper dependence on state and federal support (food stamps, section 8, etc.) weakening the u.s. economy.

Possibly bouts of riots and uprising from the people as their voices go unheard and their living conditions degrade. Making very dense living areas unsafe during these times.

Less kids going to college, instead learning a trade or craft. I don't think this is a bad thing at all.


On the positive side I see:

An increase in local markets (farmers markets, roadside produce stands, sahp doing sidejobs making things and selling them, craigslist, flea markets, garage sales, thrift stores,etc.)-I see this in my own town last weekend, there is a closed down fast food place on a major intersection, it's been closed for months. Grass and trees are growing up in the parking lots. Tons of street vendors settled in that area last weekend and it looked like a flea market.

In increase in bike riding ( so there will be a market for bicycle repair and parts, service, etc.)

People will be helping others out. The lower class has more to offer in the dept. They already are skilled at helping out family, friends, neighbors w/babysitting, food, supplies, etc.

Local community will come alive again. Plays, artists and artisans, local food producers, etc.

Stay at home parents will become more of the home caretaker then ever before, cooking, gardening, canning, babysitting other kids, crafting, side businesses, making things and selling them on Etsy or Ebay or at the flea market. Saving and making the family more $. More one-vehicle families, a resurgence in neighborhoods, getting to know the people who live around you. Possibly community gardens too.

I have more on this topic but dd needs me right now, be back later

[meandk0610]