U.S. Recovery: R.I.P. – What to Do Now …

If you’ve been unsure about which way to turn, the latest events should have cleared up any lingering doubts.

Until a short while ago, although most Americans sensed — intuitively or personally — that something was amiss, they couldn’t be sure.

We had a semblance of recovery in the U.S. economy. The stock market was going up. And the Washington PR machine was working overtime to persuade us that “everything’s OK.”

So I can understand how this dichotomy — between what you feel and what they’re saying — could have created some confusion.

Now, however, that uncertainty is over, done, finished.

Heck, even during the recent “recovery” phase, we knew that the economy was running on just two cylinders: Government stimulus and some manufacturing. But now, those two are ALSO grinding to a halt:

First, consider manufacturing: The Philadelphia Fed’s manufacturing index just plunged 7.7 percent! That’s not just a slowdown in production growth. For the first time in more than a year, U.S. factory output is actually shrinking!

Second, government stimulus: Federal money is running out, and no more stimulus is forthcoming. Meanwhile, cities and states are swimming in so much red ink, many are shutting down schools, fire stations and entire police divisions.

The laid off workers are in shock. They thought their government jobs were secure. They never dreamed they’d find themselves on the unemployment lines.

Most economists are equally shocked. They had no clue that unemployment would surge at this stage in the “recovery.”

Case in point: Last week, among the 42 economists surveyed by Bloomberg, not ONE predicted a large increase in new claims for jobless benefits. In fact, week after week, most of the “experts” have been putting out projections that the new claims were about to decline.

Instead, just the opposite has been happening! And last week, jobless claims surged again — this time to 500,000, the worst in nine months.

In other words, in addition to the millions of unemployed that have STILL not found jobs — even a year or more after the last big dip in the economy — a whole NEW crop of laid off workers are now flooding the government’s unemployment offices.

Those same economists also said personal bankruptcies were going to go down. Wrong again! Bankruptcies are now surging by as much as 9 percent every three months. That’s an annualized increase of 36 percent per year!

In fact, the last time we saw a plague of bankruptcies this big was in 2005 when hundreds of thousands hurriedly filed before the new, stricter bankruptcy laws went into effect.

What to Do Now

First, move most of your money to safe, short-term cash parking places. Yes, I know — the yields stink. But in a sinking economy, the return OF your money is far more important than the return ON your money.

Second, don’t assume that every bank is safe or that the government can fully bail you out no matter how many banks may fail. Do business strictly with banks that have the resources to survive bad times even without government aid.

For our latest free list of the nation’s banks with the strongest (and weakest) Weiss ratings, click here.

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