For the bold, opportunities swarm: Strategies for managers, employees, investors, consumers, and borrowers

By Peter Coy

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When conditions are dire and people are losing their nerve, Traxis Partners hedge fund conductor Barton Biggs pulls public a chart of the London stipe market’sitting work during World War II. The fever line plunges as the German army invades Poland, Denmark, the Netherlands, Belgium, and France. Then an odd thing happens. Just when the mood is darkest—in June 1940, as Adolf Hitler is inspecting conquered Paris—the market finds a bottom and begins a long, steep rebound. It’s almost of the same kind with if investors opinion that somehow or other, some way, Hitler is destined for defeat.

As those doughty Brits demonstrated approximately 70 years ago, fortune favors the forward. As long as you’re not overleveraged, scary times like the popular recession be able to present a perfect opportunity to make calculated bets. That’s true whether you’re a manager, an employee, an investor, a consumer, or a borrower. In this Recession Survival Guide, we’ll share some of the smartest ideas we’ve heard for people in each of those roles. Most of us sudden into all of them in one way or another.

With markets gyrating from day to time and the financial system still seeking its footing, none one can be fully convinced the kind of will happen next. Still, we’ll try to dope out where the economy and fiscal markets are headed, and to suggest how BusinessWeek readers have power to survive and as luck may have it even become wealthy in their occupation and personal lives.

To be sure, it takes either iron self-control or Teflon self-delusion not to develop a bunker mentality in these difficult times. On Oct. 17, to pick correct one epoch of bad news, the Reuters/University of Michigan’session survey of consumer private posted its biggest one-month decline considering it began more than 50 years ago, while the government said single-family housing starts hit a 26-year low. Glumness prevails. Faith Popcorn, the pop trend analyst, says: “If you go up Madison Avenue [in New York], past Fendi and Prada, those supplies are deserted. Women are shopping in their possess closets. You handle shame in buying even if you can buy.”

How abundant worse might things get? Possibly a lot. Nariman Behravesh, Global Insight’sitting chief economist, forecasts a demulcent recession, but he sees about a one-third uncertainty of a part more—a 1.5% to 2% contraction in U.S. gross domestic product in 2009 as a whole, which would make this recession nearly as bad as the back-to-back downturns of 1980-82, which were the deepest since World War II. And the post-recession recovery could be sedulously slow. Even after the mild 2001 dip, it took four years during the term of use to regain its pre-recession crown.

Credit crunches like the current one (except milder) contributed to all three of the last recessions. In 1980, the Carter Administration tried to cool off the economy with government-imposed credit controls and succeeded all overmuch in a proper manner, contributing to the sharpest quarterly downturn in real GDP growth in the past 50 years, a parsimoniously 8% annualized decline, says JPMorgan Chase economist Robert Mellman. JPMorgan predicts the current squeeze will cause GDP to decline at an annual rate of 2% this quarter and the next, however the bank expects a healthy recovery in the back half of 2009.

Expect the biggest hit to the sectors that most depend on credit availability, including the already depressed housing and auto markets. Consumer spending be inclined feel pain as Americans confuse access to lending and attempt to reconstruct their savings. Private, nonresidential construction, which remained strong long after the housing market tumbled, is headed as being a splinter of its own, predicts Global Insight’session chief U.S. economist, Nigel Gault.

Government spending, by contrast, will increase to fulcrum up the economy. Manufacturers (outside of autos) should continue to do comparatively well, despite the dollar’s recent uptick and the slowdown in foreign markets. Stuart Hoffman, chief economist at Pittsburgh’s PNC (PNC), predicts the unemployment rate will reach 7.5% to 8%, about as high as in the cross aftermath of the 1990-91 recession, though not during the time that bad as the 10.8% peak of the 1980-82 slump.