Recession Demystified
If you have been paying attention to the news lately or couldn’t put your phone down because of social media, you most certainly have heard the word recession. Well, what is a recession? Let’s start with what a recession is NOT.
Depression is not a typical recession. Though it is a type of recession, a depression is not an accurate picture of what a recession typically is. Depression is a sustained downward trend in a country’s economy. It results in large spikes in unemployment, poverty, and homelessness, lower household incomes, massive declines in the stock market, large numbers of reported personal and business bankruptcies, and considerable reductions in international trade. Essentially a depression is a more prolonged and more severe recession.
Recession
If the Hulk represented depression, Bruce Banner would be the image of a recession. A recession is also a downward trend in a nation’s economy resulting in the same types of decline as depression, just not as severe or as long. For example, a continued negative trend could be classified as a recession in as little as two months. However, the Great Depression lasted from 1929 to 1933, almost four years!
So no reason to panic!
Continue to make good financial decisions which means:
- Don’t live outside your means
- Concerning credit, pay your bills on time or earlier, never late.
- Savings
- Have money saved for emergencies ( See Dave Ramsey method)
- Try to buy things in cash because CASH IS KING (Fewer payments, more Funds)