How to survive a recession, in six easy lessons:
Don't panic. There's nothing revolutionary or fatal about what's going on in the American economy today. We've been having recessions since George Washington was hacking at cherry trees, and despite all the claims of all the politicians, not one of them has been able to repeal the business cycle. Downturns are as a natural a part of long-term economic growth as breathing. As excesses build up during a period of expansion, the bill eventually comes due; still, despite the record length of the 1980s recovery and the huge buildup of public and private debt, it wasn't until after Saddam Hussein marched on Kuwait that we tipped into outright recession. This suggests tremendous (and widely unrecognized) underlying strength for the 1990s, as we look past the present, entirely natural correction.Pay down your own debt. Politicians love to make ordinary people feel guilty; it's one of the conventional ways government gets off the hook for its own irresponsibility. In reality, however, private citizens traditionally handle debt far better than government officials do; as harder times approach, intelligent people start reducing loans, and that's the course you should be following now. (If the federal government handled its debt one-tenth as responsibly as the average American family handles its, we wouldn't have this horrendous national deficit problem to contend with in the first place.) Not only is it sensible to reduce your monthly carrying charges in more uncertain times, but the tax law in 1991 no longer subsidizes and encourages the pell-mell accumulation of consumer loans.
Do what the government refuses to do: Get your household budget in order. This means reviewing all current expenditures to see where reductions can be made in non-essentials. We all ought to do this more often than we do, but recessions have a way of concentrating the mind. Don't "fly now, pay later," don't buy to impress the neighbors, don't make expenditures just because you always have. Just as corporations in trouble have to become leaner and meaner, so should households; those that move early and wisely will find, like many restructuring corporations, that they emerge stronger and more prosperous when times improve.
Reassess your career. An enduring strength of the American economy has been the mobility of the American people: social mobility, geographical mobility, job mobility. Take a hard look at your company and at your role in it. If either of those assessments raises doubts, become more aggressive in seeking new opportunities. You're in the business of you; make sure it's a growth business.
Seize the opportunity to buy low. Times like these are traditionally bad for investors - stupid investors. But these are terrific times for the rich people of 1999. Long-term money is made by those with the courage to buy when others are terrified. Don't be a jerk and think you can pick the exact low, but invest regularly and systematically in quality companies to the extent your resources permit. You won't just be laughing with relief the next time it's clear that the world, once again, failed to come to an end; you'll have made money out of the fact.
Get smarter as a citizen. Insist that Congress stop stealing from you by cynically voting ever higher spending and taxes. Demand the immediate repeal of 1990's shamefully ill-timed tax increases, which are already exacerbating the recession - and, predictably, the deficit. Remind the legislators that they need to restore (not further diminish) incentives to save and invest, so the rest of us can get back on the track of better jobs and happier living standards. Tell them to stop scapegoating private citizens for the debt excesses of the 1980s, and start looking in the mirror. And - smartest of all - don't hold your breath waiting for the demagogues to reform; make sure you do what they don't, and get your own financial house in order. This recession too shall pass, but Congress goes on forever.