Invest your money

The worst U.S. economic slump since the Great Depression abated in the second quarter as government spending programs started to kick in, while the sharpest pullback by consumers since 1980 augured a muted recovery.

Gross domestic product shrank at a better-than-forecast 1 percent annual pace after a 6.4 percent drop the prior three months, Commerce Department figures showed yesterday in Washington. A survey of purchasing managers showed separately that business contracted less than estimated in July.

Consumer spending, which accounts for about 70 percent of the economy, fell at a 1.2 percent pace following a 0.6 percent increase in the prior quarter. It was forecast to drop 0.5 percent, according to the survey median. Purchases slid 2 percent since the peak at the end of 2007 — the most since a 2.4 percent decline in the 1980 recession.

Source: bloomberg.com

U.S. and European stocks fell, extending losses from the first weekly decline for global equities in more than a month, as the World Bank said the recession will be deeper than previously forecast. Treasuries rose, while a drop in commodities sent oil below $68 a barrel.

Equities and commodities retreated after the World Bank forecast today the global economy will contract 2.9 percent this year. That compares with a prior estimate of a 1.7 percent decline. Growth is expected to return next year with a 2 percent expansion, lower than the 2.3 percent prediction about three months ago.

Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. This is a clue that the stock market is already expensive. Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating rising unemployment is prompting consumers to boost savings. The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent.

Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for months if not years. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued.

Mexican stocks were downgraded by UBS AG to “underweight” from “top pick” among Latin American equities on concern the country’s economic outlook may worsen because of the deadly swine flu.

UBS on March 9 named Mexico its favorite market in Latin America, saying investors had already factored in a “severe” recession for 2009 and shares were the cheapest in a decade.

Retail sales in the U.S. unexpectedly fell in March as soaring job losses forced consumers to save money. The 1.1 percent decrease followed a 0.3 percent gain in February. Auto dealers, electronics stores and restaurants led the decline. Less consumer spending heading into the second quarter means the recession is likely to persist.

The way for you to cut the amount of fuel you consume for your car is called hypermiling. It’s a term that is widely talked recently. During this recession, saving fuel can save you money. Since most of us rely upon our vehicle to get us around we need to make it go with less fuel. Several ways to save gas are:

1. Driving habits is very crucial to save fuel. You need to stay at a constant speed as much as you can. Even if you are in a hurry, driving fast and slowing down in traffic won’t save you very much time. Aggressive driving doesn’t get you any faster, yet it is costing you more fuel than it should to arrive at that destination.
2. Turn off your air conditioner if you can. This is a very big waster of fuel for your vehicle. For example, in the summer you can run errands early in the morning, to you won’t be relying upon the air conditioner to keep you cool.
3. Check your tires on a regular basis to ensure they aren’t wearing unevenly or needing to be replaced. It is also important to check the amount of air in each of the tires. You must have the right pressure for your tire.
4. Vehicles that aren’t well cared will end up using more gas than those well maintained. Don’t wait until your vehicle stalls on the road. Preventative work will save you money. If you can hear noises that it wasn’t making before you need to have a mechanic check it out. This can prevent you from more serious damage.
5. Make sure you take the time to get your oil changed regularly. It is a good idea to have your oil changed every three months or every 3,000 miles. Go by which one of them takes place first. It is vital to use a good quality of oil and the correct grade of oil for your vehicle.
6. Replace your air filter every 3 to 4 months. Some people find that it is just as effective to take theirs out and to blow it out with pressure from an air compressor.
7. Avoid traffic jam when travelling. Do your best to avoid bottleneck areas, near road construction or driving at rush hour. You can find alternative roads to avoid those heavy traffic roads. Even if the alternative is one that is several more miles, it can end up saving you fuel in the long run.
8. When you are not using your vehicle, turn it off to save you on gas. Many people let their car idle to warm up in the winter and then to cool down in the summer. You can place your vehicle in a garage so you don’t have to let it sit outside collecting frost or heat.
9. The heavier your vehicle is the more gas it is going to use. You can remove things on it to lighten your car to save money. You can remove unimportant things in your trunk like heavy tool box, heavy speakers and sound systems.
10. Change your car into more efficient vehicle. You will notice that many vehicle manufacturers are offering more compact and medium sized vehicles, which saves more money on gas.
11. Do try to carpool as much as you can to and from work. If you can trade of weeks of driving with a co-worker you will cut your costs in half.

1. Don’t panic. The first thing you should do is not panic. By panic, you are making things worse. This is not the end of the world. Business activity, stocks, and real estate will all bounce back eventually.
2. Save money. You can save in many areas like entertainment, Food and drink, and travel. You can find out 100 ways to save money here.
3. Hold More Cash. When things get bad, cash is king. Cash is a lot safer in these days. Get your cash position to at least a year’s worth of living expenses.
4. Manage your debt. Examine your short-term liabilities. Cut your debt especially with high interest rate. You can also refinance your debt, because in recession, interest should be low to spur growth. Thus you can switch from high interest rate to lower interest rate.
5. Work harder and effectively. Take on more responsibility on your job. Not only this can help your company, but you can also show your boss that you are worth ed. You can also help cost saving for your company.
6. Buy books. If you are fired, you should have more time. Spend this time by reading books that can increase your skills, like negotiation skill, marketing skill, and other skills that you need. Buy reading books, you can also get new ideas for your job or business. These ideas are crucial in bad times. Lots of company survive the recession by having innovation. Here’s a nice book. It teaches you how to ride out a recession.
7. Invest. According to Bloomberg, the S&P 500’s valuation is less than 15.5 times reported earnings on January 13, the cheapest level since 1991. That’s why I’m buying. You can start with Jim Cramer’s recommendations. He host his own television show on CNBC, Mad Money with Jim Cramer, which features his opinions on stocks.You might want to try forex for alternative. Keep in mind that forex is more dangerous than stock. If you want to try forex, you can join eToro. Their user interface is great for beginner.
8. Build your own business. If you loss your job during the recession, it might be time to build your own business. As Robert Kiyosaki said, if you want to be rich, don’t work for other people. You can start doing business online, because it is cheaper. Don’t know where to start? Try Key Avoy’s SiteSell, it will help you create your website and promoto your website.

Japan’s stocks rallied as a 23 percent decline in the past month made shares cheap and prospects for a bailout of bond insurers spurred a late rally in New York.

Yesterday, the Nikkei sank 11 percent, the biggest slump since October 1987 and its second-sharpest drop ever, after a record 14 percent gain two days earlier. Concerns mounted that the global economy will fall into a recession, overshadowing optimism U.S. and European government plans to shore up banks’ capital will avert a collapse of the global financial system.