People often fear a recession, and even worse an economic depression.
During these periods of recession, the economy slows, unemployment rises, and companies go out of business.
However, a recession could also have benefits, clearing out poorly-performing companies and providing rock-bottom sale prices for assets.
Who benefits in a recession?
3. It balances everyday costs. Just as high employment leads companies to raise their prices, high unemployment leads them to cut prices in order to move goods and services. People on fixed incomes and those who keep most of their money in cash can benefit from new, lower prices.
How does a recession affect the average person?
A recession is when the economy slows down for at least six months. That means there are fewer jobs, people are making less and spending less money, and businesses stop growing and may even close. Usually, people at all income levels feel the impact.
What’s the best thing to do in a recession?
Here are seven tips to help recession proof your finances, as recommended by experts.
- Pay down debt.
- Boost emergency savings.
- Identify ways to cut back.
- Live within your means.
- Focus on the long haul.
- Identify your risk tolerance.
- Continue your education and build up skills.
How long do recessions usually last?
A recession is widespread economic decline that lasts for at least six months. A depression is a more severe decline that lasts for several years. For example, a recession lasts for 18 months, while the most recent depression lasted for a decade. There have been 33 recessions since 1854.