The Internet Business Digest Ezines
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Recognizing Signs of Recession
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Economically speaking, recession is a period of
temporary economic decline, characterised by the
reduction of a country's production in terms of
gross domestic product (GDP) for two or more
quarters. However, this is a lagging indicator,
i.e. we would not be certain whether we are in a
recession until at least 6 months later.
Furthermore, lay people like us would not have the
necessary economics knowledge to identify a
recession and prepare ourselves for it when it is
happening, until perhaps, media announcement.
What are the signs on the ground that a recession
is probably hitting our country's economy?
One of them is rising unemployment, very simply
because if more staff are retrenched from
companies, it means businesses are slowing or
expected to slow and they can no longer afford or
need as many workers. On the other hand, if people
lose their jobs, they would not be able to spend
their money, which leads to a string of other
problems to local businesses, e.g. business
closure. This would normally be exacerbated by
less jobs creation in the market.
Second telltale sign is the slowing down of the
housing industry. Housing industry is a popular
market as most people dreams about owning a house
in their life time. When such a market is being
impacted, it is very likely that the whole economy
would be affected.
The next sign is the inflation. When prices of
necessities such as food and gas increase faster
than the wages, consumer would need to tighten
their belt. Lower consumer spending will cause
businesses to slow down. On top of that,
businesses would also incur higher cost of
production and narrower margins, which make them
harder to survive.
Being able to recognise signs of recession allows
us to prepare ourselves mentally for the possible
trickle-down effects in the long term. This is
crucial as it is very common for people to fall
into depression during the time of economy
recession. Always look for family, friends and if
necessary, professional support to discuss our
problems and solutions. Everyone will be
experiencing tough times during a recession and
you would definitely want to stay strong mentally
to get yourself out of it!
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The Internet Business Digest Ezines
AIC Business Network
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