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Escaping from recession

Recently there have been some news reports of other countries such as France, Germany and Japan managing to get out of recession. What this means is that the total size of their economy, or GDP, has increased over the last quarter. Britain’s economy is still in decline, but since this is a global recession signs of recovery in other counties (especially those we trade closely with) is encouraging.

Unfortunately, this doesn’t mean very much for you and me. After a couple of quarters of stable growth, we should see loans and mortgages get easier to come by and unemployment start to fall – but right now I’m afraid that even if our economy stabilises or starts to grow again it will be very cautiously.

Tags: Economy, Loans, Mortgages, recession, recovery

Negotiate a price when buying online

The recently-launched website Aroxo is helping consumers to save money and negotiate a good deal in the midst of the credit crunch. Capitalising on the fact that when money is tight, sellers are often willing to bargain with buyers to secure a sale, the founders of Aroxo launched a site to allow you to negotiate a price even when buying online.

The system works quite simply – sellers have registered a list of products they stock and their “normal” prices. Buyers then browse the site and find a product that they wish to buy. Instead of comparing prices, or competing in an auction, the buyer then enters the amount of money they would like to pay for the item. All the sellers of the item are notified of this intent to buy, and make offers to the buyer – the buyer then reviews the offers and can choose to accept any of them, or to negotiate further if they wish. The buyer doesn’t commit to a purchase with their first offer, so there is nothing to lose.

Because it takes time for the offers to be made by the sellers, this approach lacks the “instant purchase” appeal of normal shopping online – but if waiting a day or so can save you a lot of money then surely it’s worth it – and the chances of buyer’s remorse are lessened also. Aroxo is currently focused on consumer electronics but they have plans to expand into other markets, and if you planned to make such a purchase it could save you a significant amount in these tight times. However, don’t buy things you wouldn’t normally have bought just because you got a good deal – that’s not the way to save money!

More details are on the Aroxo website.

Tags: consumer electronics, ecommerce, Economy, electronics, online shopping, recession

A ray of hope?

There’s good news in the housing market, at least for the moment. This article by the BBC shows that for the fifth month in a row, The Nationwide have reported an increase in house prices compared to the previous month. House prices are still lower than they were this time last year, but are on their way back up.

A couple of notes of caution, however, before we start celebrating the recovery of the housing market and the economy as a whole. Firstly, as you can see from the chart in the BBC article, house prices are also tracked by The Halifax and they have yet to release their results for July. Their June figures were noticeably less positive than those from The Nationwide and so perhaps they will not show the same improvement in July. Secondly, it is unlikely that this rate of growth can continue. Although the housing market is recovering, the economy is much worse than it was 2 years ago, the last time we had growth like this – there are fewer people working and less money available for house purchases. After the initial “correction”, we should see the prices increase at a lower rate.

And this could be no bad thing – after all, one of the largest causes of the current economic climate was the “house price bubble”, hopefully we have all learned our lesson (I’m including lenders and borrowers in that statement) and will take things slower from now on. Lenders are reticent to lend their money to high-risk borrowers, having been stung recently, and if they are properly regulated it should help stop people from being tempted into buying something they can’t afford. These two further articles from the BBC tell us that lenders are relaxing a bit and allowing more mortgages to be taken out – which means more house sales, which increases demand and therefore the price of houses. When we get the right balance between lending to no one and lending to everyone, we should see stable growth in the housing market (which is a good foundation stone for economic recovery).

We may get out of this mess yet.

Tags: Economy, house prices, houses, Loans, Mortgages, recession, recovery

Bad news on the employment front

Well, I’m back from the USA now, and the news in the UK media has been about the recent report showing that unemployment is still on the rise. A quarter of the 528,000 people who have been out of work for more than a year are less than 25 years old. There are thousands of school and university leavers who are just now entering the job market and finding it particularly tough.

However, one good thing to do if you find yourself in this situation is to look for extra skills or experience that can differentiate you from other applicants and make you stand out to employers. You can do this by looking for training courses which are relevant to the work you want to do (for example, you might consider a course on computer skills) or by trying to get some volunteer work to get you experience in the industry.

The market is so difficult now for those looking for work that even this may not be enough to get a job immediately. However, those that have spent the time bettering themselves will be the ones to benefit when the job market picks up.

Tags: Economy, Jobs, recession, training, unemployment

Healthcare in the USA

Another thing that is being mentioned a lot in the news in the States at the moment is universal healthcare. They don’t have an equivalent of the NHS that we have in the UK, to get healthcare in the US you need to have health insurance. Just as with car insurance or travel insurance, the more you pay the better coverage you get – the cheaper insurance policies will have high excesses (the amount you have to pay in the event of a claim) and may not cover all treatments.

The cost of insurance has been going up in recent years, and more and more Americans can’t afford to have any insurance at all. Small businesses are also finding it difficult to provide healthcare for their employees, as they can’t negotiate big discounts with healthcare providers. The number of Americans without insurance has been increasing, and although hard numbers are difficult to find (different organisations count the uninsured in different ways), this study claims that it could be as many as one in three are uninsured.

President Obama is pushing for healthcare reform which would cover all Americans with a government-run system, the cost of which is estimated at $611 billion. That’s a lot of money, and it could hit American taxpayers for years to come. However, it may end up costing them less than the private insurance route – as this Wikipedia article says, more is spent per person for healthcare in the US than in any other country – a centralised approach may be more efficient.

What relevance does this have for us in the UK? I believe that healthcare reform could help improve the US economy, and as I said in my last post, that will help bring the world out of recession. Why do I think this? Small businesses in the US are struggling in the current economic climate – they are having to cut healthcare benefits for their employees, or face increasing costs. Citizens with insurance spend less time being ill (as they get better treatment, or indeed any treatment, and also can take preventative measures like regular check-ups) and therefore take less time off work and are therefore more productive. With the burden of providing healthcare for employees lifted, small businesses and family-run businesses should be able to weather the storm of the global recession, and turn a profit sooner.

This is all assuming that the cost of medical insurance as it is currently is higher than the increased taxes that will be required for government healthcare to be provided. This is by no means certain, and of course, health insurance is optional but taxes are not!

Tags: dollar, Economy, healthcare reform, recession, recovery, united states, us