Recession is the term used to describe a period of time when there is a fall in the economic condition. Recession is not a simple term but has different meanings. It can refer to a period of time when the business cycle becomes abnormal. This abnormal behaviour could either be temporary or permanent and may last for a longer period of time.
A normal market cycle can be defined as one that follows a predictable pattern.
The main purpose of this is to ensure that the market economy functions properly. It also provides a foundation for other market conditions to develop. All factors such as demand, supply, investment, employment, inflation, interest rates, exchange rates, etc are correlated with each other and follow a clear pattern.
In normal cycle there is a downward trend in the trend lines. This causes the market to become unstable, which is the main reason for the economic recession.
When the recession strikes the market enters into another depression phase. During this phase, people stop spending and turn to savings. This results in falling of value of property and reducing investment opportunities. The negative situation results in further unemployment and further fall in production levels.
Economic recession is the major factor behind the increasing costs of purchasing goods and services. The increase in costs is felt in a person’s income. He has to find ways to make his budget work. If you have a large family, then you will be saddled with higher outgoings.
Recession lowers the cash flow, which results in a reduction in cash holdings. This is when savings are limited to the bare minimum. Some people are tempted to take huge loans from friends and relatives in order to keep up with their expenses. This increases their debts and makes them financially insecure.
The market conditions are greatly affected by the economic recession. There is a fall in productivity as firms do not have the resources to spend the money on supplies. Further there is an increase in unemployment. This is because most workers have no other means of livelihood.
One way out of the market crisis is to shift your business to a location with better economic conditions.
This will bring about an improvement in your business and you will also make more profits. You will also be saving yourself from financial ruin.
One should avoid the temptation of taking more loans if you are struggling to stabilize your financial situation. Another thing to remember is that you must stop wasting your time and efforts in increasing your credit card payments. You must also reduce your expenses.
Another important thing to remember is that you must put things back into your life that have been given up due to the recession. This is what will strengthen your resolve to bring it back.
These are the basic rules that will help you save your credit rating during the recession. You will also need to spend more time for yourself and get rid of the distracting and unproductive activities.
- You will only succeed if you can put all these things into practice.
- During a recession it is important to ensure that you do not lose all the credibility that you have during the boom period.
- Do not give up even during the difficult period and remain confident about the future.