Some definitions for recession;1]A recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession.2]. A recession is a measured decline in real national income sustained for at least two consecutive quarters, where GDP is the commonest measure of national income.
A general slowdown in economic activity, a downturn in the business cycle, a reduction in the number of goods and services produced and sold—are all characteristics of a recession.
A recession will cause several economic challenges, such as rising unemployment, a fall in the standard of living, price deflation etc. It creates a disorder in the entire economy. To tackle the threat economies generally react by loosening their monetary policies injecting more money into the system.
The world's top developed economies, the USA, France, Germany, UK, Italy, Japan has all had their fair share of recession.
How does a recession affect you?
1]You can lose your job
A loss of a job can be challenging for an individual. It affects your health, self-worth, status and any dependant. It is much worse when an individual does not have multiple streams of income. In a period of recession, there is less spending of money by people, which will result in fewer demands for goods and services. Businesses find it tough to cope, many will start laying workers off. During the recession, those services that are essential like nurses, doctors, police tend to keep their jobs. Our society cannot do without their services.
2]Unemployment
A fall in economic output will cause a rise in unemployment. This is because:
.Firms will lay off workers to try and reduce costs.
.Firms will put a hold on recruiting new workers.
Getting a job is difficult especially for the students graduating during a period of a recession because they will be competing for jobs with people who have lost their job due to the recession and they have more experience.
3]Lower remuneration
In a recession, firms oftentimes reduce costs by keeping remuneration low. This was a key feature of the 2008-2012 recession, also aggravated by the rising costs of living.
Under-employment also causes lower wages. A cut on the number of hours workers will put into work. Workers are engaged part-time during the recession. This helps to curb unemployment but a fall in workers remuneration.
4]Falling assets prices
An economy in decline means that the market is in decline. If you have money in the market including shares in companies and real estate, you are likely to see the value of those assets decline as the market has declined overall.
5]Firms go bankrupt
Firms will experience a fall in demand and lower profits because people are spending less, reasons are; loss of job, poor remuneration etc. The impact of this is that many businesses will be doing it tough or facing potential bankruptcy if they can't afford to cover their cost.
Surviving a recession
It is important that you reassess your monthly budget, focus only on the essentials. Put more effort into saving some percentage of your income. Build up skills on your resume.
Just know that recession won't last forever be determined and focused.
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