A recession is a period of reduced economic activity.
Today everything has slowed down. Its impact affects everyone. I asked, Todd, my neighbor who had to apply for l weeks unemmployment benefits, what was his view in a recession. He said, "Times are tough." Last week the stock market drop 5oo points. It's the worst drop in history. This isn't a good sign of things ahead. It is a concern, which many people face at this time.
When businesses decide to produce less, it sets off an alert to the consumer to cut back in food and clothing, to help pay the higher cost heating bills and high gas pricing. It's hard with many items keep going up in price, but your paycheck doesn't stretch these expenses. In a recession everyone is affected for example, a business with decrease sales, buys less and then suppliers do less business. Shortly follows the layoff of employees. These same people, who would buy products, have no money, also buy less, penny pinch. For someone who is rich, this is not a problem, as long as they have enough money, to cover their finances.
What about people who work for the government?
It's not bad for them, but they are not safe in a recession. A down trend in business, reduces governmnet taxes that cause cut backs at state level. During a prosperity decline, it lessens charitable gifts, which leads to private institutions trimming. It results in fewer jobs and smaller raises.
A recesion makes people feel threaten who depend on investments, social security, pensions, and welfare income, when the financial system isn't sound.
Recession Back- up Plan
Whether a person is employed or not, the need to cut expenses is vital, right off the bat. However, as long as you have money, this may not be your cup of tea. On the other hand, if the money dries up, the high fix expense tag will wreck your expenses fast. Re-evaluating your financial status pays.
In recession, stay away from all new debt. Helpful would be to start your Emergency Cash Fund, not built on credit, because without warning a creditor may halt your credit or bail out himself. If you do your best, you can weather the storm.
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