So you have survived the recession, but can you survive another wave? Portfolio looks at the possibility that the rise in the economy is short lived, and we may fall back into a second recession before completely recovering from the first.
How can you know whether whatâ€™s coming is a wave or a dip? Thiruvadanthai says fiscal policy between now and year-end provides clues. If Congress doesnâ€™t maintain extra aid to state Medicaid funds, continue Social Security tax cuts, and extend unemployment benefits, that could spell return to recession. â€œAll these things together would create a tremendous amount of economic drag,â€ he warns.
Inflation indicators are what worry Scott Jordan, founder and CEO of Ketchum, Idaho, apparel maker SCOTTEVEST. To the extent he is worried, that is. Jordan anticipates doubling the size of the $7 million in sales company during 2011 and again in 2012, as he did in 2010. But underneath robust demand for his products he sees potential trouble in rapidly rising costs.
â€œOur prices from our manufacturers are going up by 20 to 30 percent,â€ Jordan says. As a result, this fall he anticipates raising from $100 to $120 the price for their flagship product, a many-pocketed vest for travelers. â€œIf you see that happening with us and the major clothing companies, somethingâ€™s got to give,â€ Jordan says. â€œThereâ€™s a potential for a recession because of that. But weâ€™re not seeing it yet.â€
Photo by James Cridland