President Franklin D. Roosevelt once assured Americans that the only thing we have to fear is fear itself.
And at least one local financial adviser is saying we need that assurance now: We’re in a recession, not a depression. And we still have a lot for which to be thankful. Like, the 6 percent jobless rate. During the Great Depression, it was 25 percent.
Another example: On Orcas Island, economic icon Rosario Resort closed in October, but the former owners had been having trouble keeping the huge resort profitable year-round even during good years. But there’s now a new owner, who will reopen the resort next year with a new business plan.
“There’s no doubt that we are in a pretty difficult economic situation,” said William T. Morrissey, a financial adviser for 26 years and president of Sound Financial Planning in Friday Harbor. “A lot of things that have been happening are unprecedented.”
Morrissey said America is paying for its financial sins: Greed and corruption through Wall Street, loose mortgage lending, a negative savings rate, accumulation of credit card debt, and borrowing against home equity.
The positive side: This too shall pass.
“I think people need to gain some perspective: We’re not going into another Great Depression. Unfortunately, fear really gets a hold of people.”
His recommendation: Be calm. Thank God for what you have. And turn the TV off.
“I call it financial pornography,” Morrissey said of doom-and-gloom financial news reports. “The problem is you start believing everything you see all the time. What people need to do is be calm and don’t dwell on all the negative news. This too shall pass.”
A consumer-confidence measuring stick is here: The holiday shopping season. And merchants can hope the season will give them a boost that is comparable to what they experienced earlier in the year.
September’s lodging and sales tax figures will tell a lot about how the local economy is faring post-Labor Day; town and county governments will have those figures at the end of this month. Earlier figures tell a tale of prosperity — by Aug. 31, the county had collected more lodging and sales tax revenue than ever, while the town had its second-best year on record.
In October, the town received $112,517.65 in sales tax revenue, surpassed only by $114,944.55 received in the same month in 2005. The money was generated in August; lodging and sales taxes are received from the state two months after they are generated.
Year-to-date, the town has received $843,106.11, surpassed only by $856,951.78 generated year-to-date last year.
In October, the town received $26,571.23 in lodging tax revenue, the best August ever. To date, the town has received $106,358.64 in lodging tax revenue, the second-best year ever. It has also received $104,350.64 — also the second-best year ever — in lodging tax revenues that are used for tourism promotion.
Figures are even better for San Juan County. By the end of October, the county had received $2,615,681 in year-to-date sales tax revenue, up from $2.4 million in 2007, $2.5 million in 2006, and $2.2 million in 2005.
During the same period this year, the county had received $305,274 in lodging tax, up from $298,518 in 2007, $282,494 in 2006, and $269,051 in 2005. Double those lodging tax figures — like the town, the county collects a 2 percent lodging tax to support public facilities such as museums, parks and performing arts centers; and a second 2 percent lodging tax to support tourism promotion.
Here’s what Morrissey recommends consumers do in boom years and bad years: Save money. Make sure you have three or four months of living expenses in an FDIC-insured account or money market fund. If you invest, make sure you have a diversified portfolio; government bonds have the least risk.
And if you can, do invest. “It’s a great time to be investing if you’re comfortable taking a risk,” Morrissey said. “We are in kind of a fire sale.”
Recommended reading: “15 Things You Need to Know About the Panic of 2008,” by Fred W. Frailey, editor, Kiplinger’s Personal Finance. CLICK HERE.