If you understand the current economic meltdown, your are lightyears ahead of most of us. Basically, we have a serious, global economic collapse underway. News from financial markets from Brazil to Shanghai to London to New York was all bad today. All the indicators are pointing in the wrong direction — job losses, unemployment, credit crisis, bank insolvency, unregulated securities, and the list goes on. People who understand this are worried and furious that this house of cards has collapsed of its own greed and manipulation.
Churches are not exempt from the economic fallout. Here are some of the impacts that await us:
- Retirement accounts lose value. The stock market has fallen 30% in the past year. In real terms, if you had $30,000 in your retirement account, you now have about $21,000. And, you might have lost more if you had stock in Wachovia, accounts guaranteed by Lehman Brothers, or Fannie Mae/Freddie Mac you lost even more. Loss of investment principal will delay retirement for some, or make life in retirement more difficult.
- Unemployment increases. 760,000 jobs have been lost in 2008. More job losses are on the way with bank mergers, financial institution failures, and the ripple effect that tight credit has on business capital.
- Increase in cost of necessities, decrease in discretionary spending. Consumer spending is already declining as people wisely start to hold on to what they have. More will do the same, and because our economy runs on ‘borrowing and spending’ versus saving, fewer sales will be made, stores will close, factories will shut down, and we might actually approach deflation, or a shrinkage in the money supply in the market.
- More people in need of basic services. The social services director for our county told me that they have more requests for help now than their staff can keep up with. Watch for this to increase as more people need help with food, medical care, transportation, housing, clothing, and jobs. This presents an opportunity for churches to feed the hungry, clothe the naked, care for the sick, and do the very things Jesus instructed us to do.
- Decline in charitable giving. Charities (substitute “churches” here) are already reporting decreases in contributions. Churches are not exempt from the crunch many will find themselves in.
- Limited financing/refinancing options. If your church needs financing or refinancing you might run into difficulty due to tight credit conditions. Think about delaying your plans for building or remodeling. As a local businessman told me today, “This is not a good time to have debt.”