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CNN Today

Recession on Horizon?

Aired January 10, 2001 - 1:10 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN, CNN ANCHOR: Well, recession or no recession, our economy is changing, and smart consumers are looking for ways to adjust. And we want to help you do some adjustment today. And for that, we've asked Carrie Coolidge of "Forbes" Magazine to join us.

Hello there, Carrie.

CARRIE COOLIDGE, "FORBES" MAGAZINE: Hi, Natalie.

ALLEN: What did you think about what Brooks Jackson had to report, as far as the outlook. It doesn't seem quite so horrible as perhaps some have predicted.

COOLIDGE: That's good news. I'm certainly happy to hear it. But there is some concern that we might be headed toward a recession. And we're definitely not in one yet.

ALLEN: A recession this year?

COOLIDGE: Possibly. I mean, there is some speculation, but still, even if it doesn't happen, it's not a bad idea for people to protect themselves just in case.

ALLEN: Just in case, I'm a consumer, what do I need to do to be proactive in these times?

COOLIDGE: Well, I think the first thing people need to think about in any time is really getting out of debt. Paying off those high-interest credit cards, and putting some cash away for a rainy day.

ALLEN: So making big purchases might not be a good idea right now?

COOLIDGE: You might want to think twice about making a big purchase that is unnecessary.

ALLEN: Anyone who can do that right now is probably in fantastic financial shape. Many of us would probably have to think twice. Let's talk about those age groups who might be worried about a possible recession. Some people in the news room were saying their parents, who are nearing retirement, were really nervous, considering their investments; but you've also said that it's not just the older folks that have to be concerned. COOLIDGE: Right. Actually, it's the younger generation -- people who are in their 20s and early 30s, who have never experienced a down market. They weren't working during the recession of the early '90s. These are the people who spend before they save, and this is the age group that actually has the highest amount of credit card debt.

ALLEN: And, what about if people are still heavily in stocks? Is that something they should be weary of, or is that all right?

COOLIDGE: Well, actually, I mean, investing in equities over the long term is the way to go. Equities over the long term have beaten inflation, historically, so if you have the time set to wait out the bad times, you still want to stay in the stock market.

ALLEN: There's some safe havens under recession conditions for those that feel weary about stocks?

COOLIDGE: That's right. Treasuries and money market funds are conservative investments, and they have -- the returns might not be as high as some of the equity returns, but it's still safe and it's easy to get your money out of the money market if you need it for an emergency.

ALLEN: All right, Carrie Coolidge, "Forbes" Magazine.

Thanks so much.

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