Is the Credit Crisis Coming to a Close? Find Out For Yourself!

Is the Credit Crisis Coming to a Close? Find Out For Yourself!

Last week, the Institute of Chartered Accountants released a report suggested that business confidence was beginning to rise again, and that this could spell the end for Britain’s recession.

They said that the confidence levels of business people had risen drastically, and were positive for the first time since the credit crunch hit in autumn 2007.

However, an online poll by The Guardian newspaper found that 76% of respondents felt the recession was not ‘at an end’, and that “there’s still a long way to go”.

One of the difficulties in measuring recessions, and indeed recoveries, is that the financial markets operate on a different time scale to the ‘real economy’ – that of homes and families and shops and gas bills. Just as the full scale recession started in the finance sector long before it hit the shopping centres and service jobs, recovery is likely to begin in the city well in advance of the high streets.

So what can you do to find out if the recession is still in full swing in your area?

There are actually a surprising number of interesting ways to get an idea of the strength of the economy, just by looking around you. Economists call them ‘weak economic indicators’, back-of-the-napkin measurements can be surprisingly good at measuring the current standing of an economy. Here’s a few to mull over:

Litter at the Cinema: loosely speaking, the more popcorn being sold, the more affluent society is becoming, as cinema-goers become more stretch beyond the admission price. TIP: You can gauge the amount of popcorn being sold yourself by having a look round the cinema once the movie has finished – the more litter, the more popcorn, the better the economic signs.

Bulding Works: A large number of cranes on a city’s skyline can indicate a growing economy – more building happens when there’s more money about, after all. Empty building sites, however, can indicate precisely the opposite as projects are abandoned due to lack of resources to continue projects.

Loose change and cigarette ends: loose change lying on the ground can be a good indicator – when times are lean, you’ll not spot so much laying around. Similarly, smokers tend to get every last puff out of cigarettes when they are feeling the pinch, so long ends on discarded cigarette ends can show a booming economy.

Taxis: When the belt tightens its time to start walking or getting the bus. Lots of empty taxis can be a pretty good indicator that things are on the decline; not being able to get one because they’re all in use is quite the opposite.

The Lipstick Effect: When times are tough, many people tend to buy fewer expensive luxuries and instead get items which will not affect their budget so drastically. This is often called ‘The Lipstick Effect’, as women tend to spend more on luxury cosmetics and less on clothing during a recession – in fact, the first major boom in the cosmetics industry is said to have coincided with the Great Depression.

It’s surprisingly easy to get a feel for how the economy is doing simply by knowing what to look for and now is a great time to consider a major home improvement like having double glazing fitted or perhaps converting a garage or loft.

photo credit: stevebott