Recession -- Are we in:
Recession is a decline in economic activity within an economy, usually characterized by higher unemployment and less investment in new plants and equipment.
definition of recession - A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.
In macroeconomics , a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth , for two or more successive quarters of a year.
A severe or long recession is referred to as an economic depression. A devastating breakdown of an economy (essentially, a severe depression, or a hyperinflation, depending on the circumstances) is called an economic collapse.
Causes of Recession
recessions are caused by events that have an economy-wide impact, such as a
- decline in consumer confidence.
- increase in interest rates
- Firms reduce output and lay off workers, which further decreases demand, and the economy slows even more.
- Economic recessions can also be caused by events that would have an impact on specific companies or industries.
What Happens during a Recession?
- Stock market plummet
People are generally conservative during recession. Those who lose their jobs because of recession start selling off their investments because they need money to sustain while they get another job. The increased number of people selling their stocks causes the stock market to fall sharply - Real Estate Plummet
During a recession, people turn to fiscal conservatism. This affects the real estate industry as well, as there is lesser demand in the real estate market. People put off buying and selling of property during the periods of economic recession.
On the other hand, because of the higher supply of houses on sale as compared to the low demand, an economic recession will forcefully reduce the selling prices of homes. As such, the economic recession has a positive impact on potential homebuyers. This is also because there are lower mortgage rates that are caused by changes in interest rates. - Rise of Unemployment Rate
During a recession, there is a general trend of rising unemployment rates and decreasing overall output. With fewer people contributing to the economy, the overall economy is bound to be affected. Income growth would be stalled. While there would be more people in the market looking for employment, the demand for recruiting people is far lesser.
- You Investment portfolio shrinks
- Might lose your job
- Unable to pay your mortgage
Be prepared for Recession
- Have an Emergency Fund built up.
- Be a smart investor, revisiting your portfolio often.
- Create multiple sources of Income, dont just depend on your job.
- Learn to live within the means.
- Make some changes to your lifestyle and cut cost.
Be prepared and Be Recession Resistant.
