Anxiety will be an uninvited guest at the holiday table this year. Despite a rally here or there, the stock markets are deeply depressed. Instead of getting fat on holiday sales, retail outlets are begging for shoppers and even shuttering their doors. Companies are laying off workers, and 2009 is shaping up as...well, never mind, we'll get there soon enough.
But even in a battered economy, there are things to be thankful for—especially if you're opportunistic and bold. Here are 10:
Extra work. Mounting layoffs are scary, but even during the Great Depression, the majority of workers kept their jobs. A downturn can even open doors to achievement that are closed during flush times. When workers get laid off, it often leaves projects and clients that need to be picked up by somebody. When managers look to dole out those extra responsibilities, some of your colleagues may roll their eyes. It would be smarter to roll up your sleeves and volunteer for the extra work. Once nameless drones can build a can-do reputation by taking on new duties and proving themselves as valuable utility players. Just don't get so overwhelmed that you can't perform. And for the newly unemployed, one consolation is the chance to try something totally new—say, a part-time job working as a shoe cobbler—which can add the sort of color that really sets a résumé apart later on.
Cheap real estate. The housing bust triggered the whole economic downturn, but sooner or later it will produce some juicy bargains. Home prices have already fallen 21 percent from their 2006 peak and probably need to fall 10 to 15 percent more—at least—before hitting bottom sometime in 2010, says Richard Moody, chief economist at Mission Residential. But some areas of the country will rebound sooner, and fixed mortgage rates—already attractive at just over 6 percent—could drop another half-point or so, according to Mike Larson, a Weiss Research analyst. To get a loan, borrowers will have to fulfill some old-fashioned requirements, like documenting their income, making a down payment of at least 3.5 percent, and proving they're a good credit risk. But for those who qualify—and feel confident about their job prospects—a dream home could be just around the corner.
COLA fizz. It's tiny compared with the $2 trillion retirement savers have lost in the stock market this year, but in 2009 Social Security recipients will get the largest cost-of-living boost in 25 years. That's because Social Security increases are tied to the consumer price index, which rose more than usual in 2008, largely because of a spike in energy costs. The average monthly Social Security check next year is expected to rise by 5.8 percent, to $1,153 a month, up $63 from this year. (And remember, experts expect inflation to plummet in 2009.) The typical couple who both receive benefits will get about $1,876 monthly, and some individuals can get as much as $2,323, the maximum next year. Waiting until age 70 to claim Social Security will produce even higher payouts.
Fire sales. Consumers can snag some of the lowest prices ever on LCD televisions, Blu-Ray DVD players, and MP3 players. Dan de Grandpre, chief executive of Dealnews.com, has already seen 42-inch LCD televisions on sale for $500—a "wicked price," he says. Grandpre says consumers should grab such discounts when they see them, because once the prices drop so low, retailers typically sell out quickly. Analysts expect Apple to cut prices on its iPhone and iPods, and Microsoft has slashed the price of its MP3 player, the Zune, to under $100 for the 4-GB version.
Low expectations. With tighter budgets everywhere, hardly anybody is expecting a lavish gift this year. If you're the giver, that means you can cut expenses without being labeled a tightwad. You might simply give cheaper gifts or try some that are less commercial, such as gifts of time—visiting a museum, say, or volunteering with family members. One website, NoChristmasGiftsThisYear.com, allows visitors to give each other gift cards for activities from playing board games to cooking.
Countercyclical start-ups. There are plenty of reasons not to start a business in a turbulent economy. Consumer spending is down, for one. And getting a business financed—be it through venture capital or credit cards—is more difficult than ever. But for true entrepreneurs, following the conventional wisdom could end up riskier than taking the plunge today. One reason is that smaller, more responsive operations can adapt faster to circumstances and even thrive in a difficult economic environment that drags down bigger competitors. Businesses with only a few employees don't have that much overhead, for instance, so slow cash flow doesn't have to be life threatening. And recessions, while they squash some opportunities, create others. "Large companies are going to shed costs, so they only use things when they absolutely need them," says Jeff Cornwall, entrepreneurship professor at Belmont University. "Small businesses [can] capture that." Leap now and you might beat competitors waiting for a more forgiving economy. Wait and you might find the market saturated.
Desperate car dealers. Car sales have collapsed, and with unsold models piling up on dealer lots, even popular vehicles are on sale. Former top sellers like the Honda Odyssey minivan and Mazda CX-7 crossover now come with rebates or special financing deals—or both—and tough negotiating might get you one below the dealer's invoice. Even Toyota, long able to charge a premium for its vehicles and avoid generous giveaways, is now offering zero-percent loans and other come-ons. And it goes without saying that there are huge discounts on big SUVs like the Jeep Commander and Chevrolet Tahoe, which are out of favor with thrifty buyers but might still be fine for people who mostly drive a gaggle of kids around town. As with mortgages, it's harder to qualify for a car loan. But if you have good credit and can make a 10 or 20 percent down payment, dealers desperately want to sell you a car. So make them an offer they can't refuse.
Undervalued stocks. If you have any cash left after the recent rout—and a healthy dose of gumption—you might be able to buy stocks at the cheapest prices in a generation. The current price-to-earnings ratio of the S&P 500 is around 14, according to data compiled by Yale's Robert Shiller. That's below a long-term average of 16.3, and by this measure stocks look the cheapest they've been since 1985. Lots of solid, well-known companies are trading at even deeper discounts than the overall S&P: Home Depot, Boeing, and 3M all have P/E's below 14. Just make sure you buy for the long haul—and can withstand a few more months of vertigo.
A return to simpler times. Americans are starting to take up retro habits that evoke come-together moments from the past. If a car isn't available, some commuters now turn to bikes they can acquire free from Craigslist. Instead of buying new wardrobes from fast-fashion retailers, recessionistas, as they're called, swap clothes with friends or take up knitting. If restaurant meals strain the budget, more families are learning to cook—sometimes with food grown in their own backyards. The new frugality saves money, but it has other upsides. Biking and walking are obviously healthier than driving. Hand-me-downs keep old clothes out of landfills a while longer.
A lower tax bill. President-elect Barack Obama has proposed a slew of tax cuts for middle-class consumers, and, with the economy desperate for a boost, it could be one of his first orders of business after taking office in January. His proposals include a $500-per-worker tax credit for people who earn less than $150,000; a 10 percent universal mortgage credit for homeowners who don't itemize their deductions; and a $4,000 credit per child in college. Obama says that a married couple with no kids making $90,000 per year would save $1,000 in taxes, and a couple making $75,000 with two children, one of whom is in college, could save $3,700. Households earning more than $250,000 are probably in for a tax hike, but very likely not until 2010, when the economy is healthier.