Whats happing to the economy?

Conrad11

Conrad11

Conrad11

Soldato
Joined
12 Jun 2005
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Hi there,

I was wondering whether you could clear something up....

Basically, I keep hearing that a recession is coming, does that mean we are in the boom stage now? or are we in the recovery stage, if not, what stage are we in and what are the implications of said stage.

....when do the experts estimate the recession will happen?

With recession, what actually happens? people have less disposible incomes? (why is that?)

Thanks for any info....a link would be nice....but i dont want to have to read a 10k word essay.....just want the general jist.
 
imho we've just come over the crest of a boom. It's a long way down now... although not everyone agrees.
 
Hades said:
imho we've just come over the crest of a boom. It's a long way down now... although not everyone agrees.
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I'd agree with that and add that the govenment and the banks are currently fighting to avoid a full blown recession by tweaking interest rates and whatever else they do.

Personally I think that there is too much going on around the world e.g. booming economies in China and India coupled with major financial institutions in the west overstretching their assets, to avoid a recession here and in the USA.

I'm moving house right now and am seeing first hand how this uncertainty is affecting the mortgage market with most of the good deals drying up fast.
 
I'm moving house right now and am seeing first hand how this uncertainty is affecting the mortgage market with most of the good deals drying up fast.
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So am I and it is becoming more of a white knuckle ride everyday!
 
Well we are in unchartered territory. LOTS is happening and influencing the economy. We have had 8 years of an economy that been so overinflated that its about to burst and leave an awful mess. The real economists were saying that this was unsustainable back in early 2000's, their surprise is its lasted so long.

If you know anyone working in something like the restaurant sector they will tell you that hardly anyone is going out anymore.

You have some economists saying this will be the worse slowdown in the last 100 years, dont think it will be that bad, but there will be some trouble ahead.
 
I seem to remember reading that according to the technical definition of a recession, both us and the US are currently in recession. I'm just glad I get on well enough with my parents to stay put for a while, tbh :(
 
Pinter75 said:
So am I and it is becoming more of a white knuckle ride everyday!
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Apologies for going off topic but I bit the bullet today and went with a 5 year fixed rate deal - interest only as I've got 5 years left on a fairly hefty loan but it means I had a much larger deposit on the new place.

Anyway, my point being that I kept thinking to myself that I should be going with a tracker as it's extremely likely that interest rates will drop a fair bit over the next few years. Trouble is my financies are precariously balance at the moment so I had to trade a possiblly better deal for the security offered by the fixed rate.

It really is a rubbish time to move but when the house you want comes up you just have to go for it. :)
 
Mohinder said:
I seem to remember reading that according to the technical definition of a recession, both us and the US are currently in recession. I'm just glad I get on well enough with my parents to stay put for a while, tbh :(
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Isnt it 3 consecutive quarters of negative GDP?
 
Your all being too negative if we all spend all our money as quickly as possible and then borrow a lot more money and spend that the economy will be fine.
 
According to the technical definition of a recession neither the UK or US are in a recession yet and, given that the last GDP figures for us were positive, we won't be in a recession for a while yet.

That doesn't mean all is well though.
The economic growth we've had recently has been far too dependent on expansion of credit.
Now that credit is becoming a lot tighter this will have an impact on the economy.

IMO this is going to take a while to play out, it's not something that will be over by the end of the year.
 
Meths said:
Apologies for going off topic but I bit the bullet today and went with a 5 year fixed rate deal - interest only as I've got 5 years left on a fairly hefty loan but it means I had a much larger deposit on the new place.

Anyway, my point being that I kept thinking to myself that I should be going with a tracker as it's extremely likely that interest rates will drop a fair bit over the next few years. Trouble is my financies are precariously balance at the moment so I had to trade a possiblly better deal for the security offered by the fixed rate.

It really is a rubbish time to move but when the house you want comes up you just have to go for it. :)
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So you're basically renting for the next 5 years?! Don't mean to be rude, but imo a 5 year interest only deal in crazy.
 
Conrad11 said:
Thanks for any info....a link would be nice....but i dont want to have to read a 10k word essay.....just want the general jist.
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General jist:-

- Less cheap money (credit), this has a few significant implications

-- Less money for mortgage deals or mortgage deals not as good. If you need a 25% deposit instead of 0% or 10%, then people will not be able to buy as big houses -> Small houses go up in price (due to the demand), large houses go down.
-- Less mobile workforce. If people can't move as easily, then you will get a less efficient distribution of skills accross the country.
-- General belt tightening by companies.

I'm not an economist, just an IT contractor. I don't see projects getting canned because of money issues at the moment.
 
Von Luck said:
Unless we start getting a lot of job losses, I don't think we'll have a massive recession, more of a financial correction. The days of cheap credit seem to be over for a while, so anyone who has overstretched themselves with a big mortgage or lots of BTL properties could be in for a rough ride.

I'd imagine house prices will dip slightly, again pushing some people into negative equity, but for the vast majority it will just be a case of tightening your belts for a while.
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Disagree with the small recession ideal. When people start seeing redundancies and cuts they tighten their spending. With a mainly service based economy any reduction in spending is going to have a big impact. Then you get the knock on effect.

Same with houses, the idea of a 'soft landing' is a bit far fetched IMO. Look back and tell me when this has been achieved before? It's a myth dreamed up by self proclaimed experts that have been trying to convince everybody over the last 8 years they have not been buying into a bubble.

As a business owner I am preparing for a rough ride of the next few years.
 
Meths said:
Anyway, my point being that I kept thinking to myself that I should be going with a tracker as it's extremely likely that interest rates will drop a fair bit over the next few years.
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I would NOT want to be going on to a tracker now... Yes interest rates may drop over the short term, but inflation caused by the rising prices of grain, oil, and most importantly a weaker £ making imports more expensive will probably drive interest rates up over the next few years.

I believe we are already violating EU guidelines (Stated in the Maastricht Treaty) on our inflation rates. (AND this is with the Labour government skewing them rediculously already), so there is pressure on the BoE to try and correct this by hiking rates (This explains why we have not seen the huge falls seen in the US)

This is all IMO, and does not constitute to financial advice ;)
 
The only bit of this economic slowdown (seeing as the Government can't use the word recession) that worries me is the effect it will have when I come to renew my mortgage deal. :(
 
Vai said:
Just a question, how will the changing economy / a recession affect savings?
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All depends on interest rates. None of the big banks will go under now (before anybody pipes up about NR, that debacle makes it even more unlikely as the banks are tightening right up), so it's all dependent upon the BoE and how the banks pass on the rate changes.
 
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