It has been more than two months since I wrote “It’s gloomy out there“. It’s getting gloomier. Every passing week brings more bad news. Big-name companies, that are generally thought as safe for employment, are also laying off big time.

Last week Microsoft announced termination of 5,000 employees, Intel announced the elimination of 6,000 jobs and United Airlines said it would get rid of 1,000 jobs. More than 40,000 employees received the pink slips today. Unemployment is hovering around 7%, it ‘s estimated to reach 10%.

In a survey by the National Association for Business Economics, 39% of companies plan to reduce payrolls over the next six months, while 17% plan to increase employment. Only the services sector continues to create jobs. Survey respondents continued to grow more pessimistic about the macroeconomic outlook.

Related Links: Job killing recession | Unemployment rate surged to 7.2% | Five legal ways to work from home

It’s the typical catch 22, as personal savings rates increase it prolongs the economic recession, but saving your personal finances is certainly the right thing to do in the long run.  The truth is while it may not be good for a quick recovery for the overall economy, an increase in the personal savings rate of Americans is good for the long-term health and stability of our economy.

What exactly is the personal savings rate? It’s just like it sounds actually, it is personal income minus expenditures. In the most simple terms your own personal savings rate is what you make minus what you spend.

The personal savings rate of the average American has been alarmingly low in recent years. In fact, in late 2005 and early 2006 during the mortgage boom Americans were actually spending more than they were making. This certainly didn’t help the current situation we are now in. In recent months the personal savings rate in America has grown up to a level of 2.8% in November. This is still a number that is quite low, but it is certainly an improvement from the below 1% or below 0% that had become the norm a couple of years ago. To put the current savings rate into perspective, during the 1950′s the average personal savings rate was about 10 or 12%. Clearly Americans were more frugal with their money now than they are now.

While a recession has many terrible repercussions, one benefit will likely be that of the personal savings rate increasing. Over the long run this will allow more Americans to have more capital to invest and be much less reliant on debt. After all it was reliance on debt that got so many companies into horrible trouble on Wall Street. My hope is that Americans will learn their lesson and increase their personal savings rate and have that rainy day fund that is so essential.

During a normal economic period earning money from home is something that select people enjoy and try to make a living. During an economic period like we are currently in, earning some extra income from home can be the difference between being able to make a payment or not make a payment. I’ll take a brief look at five legitimate ways to earn money working from home, either full-time or part-time.

1. Paid surveys or product testing- The truth is there a lot of these types of companies that are real and do pay quite nicely to take surveys or test their specific products, but you have to be careful about which websites you sign up with. A site like topsurveysites.org is helpful because it shows you ratings of the most reliable sites. Don’t count on this for a full income, but it can be a nice supplemental amount of money.
2. Work from home data entry- Working at home in the data entry field has become all the rage of late, and there are a few good companies in the area, and a whole lot of scams. Two large signs that the company is a scam is if you have to pay money to join, or if they continually send emails to recruit you. The legitimate companies must be found on your own since they have plenty of applicants, and they will be completely free.
3. Freelance writing/photography- Making a living off of a freelance writing income has become more realistic over the years. This is actually a great area to be in during a recession since many companies downsize and look for freelance writers rather than full-time paid staff writers. Freelance photography is a growing area that is also quite interesting.
4. Online tutoring- Tutoring students online has become a popular way to make some extra income and for good reason. These companies are generally very flexible and pay a reasonable amount of money to their tutors.
5. Blogging- Writing a blog won’t make you a millionaire, but it can be very fun and you can make some adsense money in the process. In fact there are a few bloggers who have hit it big because their particular niche has been very popular. Blog because you love to do it, and then take the money as a perk on the side.

All of these work from opportunities are available to you today. The benefits of this type of earning money includes: flexibility of schedule, no transportation costs, the ability to earn a passive income online, and direct responsibility for your own work. Use these types of work from home jobs to supplement your income and help you get through the economic recession.

A mutual fund is a great tool to use to invest in the stock market without having to actively manage their own money. The instant diversification of a mutual fund is a terrific advantage for those who are just starting out investing their own money. These things being said, you need to be picky about what type of mutual fund you get into. Mutual funds come in all different sizes and shapes, so there is bound to be one that fits your needs, but it is up to you to make sure the fund is in line with your financial goals and expectations.

For example, if you are about to retire and want to be in a mutual fund it would be wise to go into a mutual fund that contains a fairly large percentage of bonds or money market assets that are very liquid. Someone in this age bracket simply shouldn’t take the risks that investing in stocks bring with them, and the last year should be a perfect example of what kind of risks there are. On the other hand, someone who is very young and is simply looking for long term out performance from their mutual fund can be much more aggressive in their choices of mutual funds. This age bracket would likely want to include some aggressive growth and some foreign stock funds in their portfolio. Over the long run, despite the lumps they should expect to finish ahead of where they would have in a simple treasury bond or certificate of deposit.

Don’t get stuck in the wrong kind of mutual fund. Weigh your options and consider your financial needs and goals thoroughly. Think about it this way, when you put your hard earned money to work in a mutual fund you are entrusting a money manager with your future so it certainly isn’t something you should take lightly!

The last couple of days have made it abundantly clear, volatility is still the name of the game in the stock market right now. Consecutive days of a loss of 335 points and then a gain of 279 points on the Dow used to be a very rare occurrence but now it is simply become the norm.

What exact does this volatility in the stock market tell us about the current state of the economy and the confidence of investors? It tells us that investors are very uncertain about what is next for the economy and at this point they are unable to make any stable hypothesis as to when things will get better. Rather than a stable market that tries to find its footing we have a market that is full of uncertainty and is as fickle as any market in decades. One day investors may be encouraged that things may not be quite as bad as they feared, while the next it feels as if the sky is falling.

What should the average investor do in this kind of environment? The key is to not read too much into daily movements of the market. The wild swings up and down are likely to continue, but until the volatility begins to level off it will be very difficult for the individual to make money in the stock market. It is fair to say that in a period with so much uncertainty and so much volatility there is a much greater risk to the average investor than there is reward.

This doesn’t mean you can’t invest in anything or you shouldn’t be doing your homework on companies you might invest in sometime down the road. It is always a good idea to be ready for the time when it comes, but also realize that turning the calendar into January has done nothing to change the sentiment of the market. Tread with extreme caution during these volatile days.

Today, Bank of America’s stock is up 13%. Citibank is up 10%. It looks like these stocks are really cheap, isn’t it? Yes, they are. Only problem is that they may go even cheaper.

Analyst firm Friedman, Billings and Ramsey came out with some bearish opinions on the banking sector yesterday. They said that Bank of America might have to raise an additional $80 billion in capital by selling more stock. FBR was also concerned that Wells Fargo will have to drastically reduce its dividend and that it may also need to raise capital by selling more stock. All of this negative news took toll on the banking sector yesterday. It may be a sucker’s rally today, it’s better not to get in there even when the 10% per day return is dangling in front of you.

Here is my problem with the banking sector. These guys are not telling the truth. I doubt whether they even know the full extent of their internal problems. Bank of America at $5+ and Citibank at $3 look very attractive. But, it’s prudent not to get lured by these numbers. Just wait out until the fundamentals improve.

Barack Obama is faced with a large task as he enters office today as the 44th President of the United States. Our nation faces numerous battles militarily and is strained for cash because of the record deficit, but he also must do something to turn around an economy that is clearly sinking quickly.

To this point Barack Obama has primarily spoken of his stimulus plans and how he believes they can create jobs for at least 3 million Americans. The stimulus plan will be expensive in the interim, but President Obama sees it as being well worth the cost in the long because he believes it can bring a great return of investment for our nation. Today in President Obama’s inaugural speech he also said that plans will have to be gone through thoroughly and some that are not performing will have to be cut. Clearly President Obama understands that real changes must be made and quickly.

Wall Street and much of the investment world was slightly concerned with President Obama’s talk through the election season about some of his tax plans. Some on the street think that President Obama could end up making the economy worse by raising the capital gains tax to as much as 40% as he suggested he might. Others worry that though Obama promised tax cuts for 95% of the country, it will be hard for him to deliver on such a promise with a deficit that is already out of hand. The spending of our government clearly must be slowed down, and many hope that President Obama understands this.

So can Barack Obama right the economy? We won’t know the answer for quite some time. The other truth is, it will never be one person that turns an economy upwards or downwards, but the President must pick a cabinet stocked full of people who are wise to the issues we face in this modern economy. As Bharathi said in today’s post earlier, Americans like myself, as well as the rest of the world are surely hoping that his words turn into actions that stimulate the economy over time! This is a global economy and President Obama holds a very important position in leading the path to a possible recovery.

Mr. Obama took the office. Not only America, entire world is looking for miracles from him. In his inaugural speech Obama said “Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America: They will be met.” We sincerely hope so.

Obama has a goal of creating 3 million new jobs in the next two years. If he can succeed in getting the buy-in from all politicians, it will truly reshape our economy. Forbes wrote detailed report on what kind of jobs would be created by Obama’s plan. Most of the jobs will be infrastructure related — like construction, civil engineering, CAD specialist, etc., These jobs will also create employment for service industry that serves the infrastructure industry. If Obama can show his words in actions, there may be a light at the end of tunnel.

Related Link: Obama’s Inaugural Speech

We wrote about how the banks were reluctant to provide details of the spending of bailout money they received. Now, the government is taking some action and asking banks to provide the data. The Treasury wrote on January 16 to 20 banks getting funding under the Troubled Asset Relief Program asking for more information about business and consumer loans. The government also asked for data on mortgage-backed securities and asset-backed securities purchases. Citigroup, Bank of America, Chase and other banks received the letters. These banks said they planned to comply with government reporting requirements.

Well, that’s the good thing. At least now, these guys are prepared to provide the details of how they spend our tax money.

Related Link: Where is my money?

While there are many reasons that the stock market and the economy are currently in a horrible funk, it would be very unwise to discount how important the lack of accountability in the stock market is right now. Every day we see more signs of less and less transparency in the markets and more clouded views of exactly what is going on. 

It all started back in March when Bear Stearns executives continued to reassure investors that things were just fine at the company. Just a few days later the company had to be bailed out by the government and JP Morgan Chase. The story has continued as banks and brokerages such as Washington Mutual, Merrill Lynch, Morgan Stanley, Goldman Sachs, and others have all either merged or been bailed out by the government.

Just today Bank of America announced it needed $20 billion more in government support so that it could takeover Merrill Lynch. As everyday Americans get home and hear this news they are sure to be furious. They have a right to be! Right now it seems the banking industry can’t even get their own numbers straight, which is certainly concerning for the everyday tax paying citizen who is footing the bill.

Americans are tired of hearing people say everything is fine and then days later being bailed out by tax payers hard earned money. The fact is investors on Wall Street typically take bad news fairly well, but what we’ve been getting lately isn’t just bad news. Lately what we have gotten are empty promises and no transparency or accountability. Until Wall Street and the banking sector of our economy can get its act together and open up their books to the public uncertainty will reign and the American people will be very skiddish about this economy. I think I speak for all Americans when I say just tell us the truth about how things are going, don’t sugar coat things and then file for bankruptcy three days later.