The recession of 2022 may have you wondering what exactly it is and what that means for the economy as well as your personal finances. While experts are still predicting whether or not it will occur, there are signs already that point to an economic downturn later this decade.
What Is A Recession?
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months. It is visible in industrial production, employment, real income and other measures of economic activity.
The National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months. The NBER does not declare recessions officially; that call is made by a committee of economists.
In the United States, a recession begins just after the economy peaks and ends as the economy reaches its trough. The peak marks the end of an expansion and the beginning of a contraction. The trough marks the end of a contraction and the beginning of an expansion.
A recession generally lasts about 18 months. The average length of 11 postwar recessions has been 13 months, although the longest was 17 months. Economists also categorize recapses as mild or severe. Most American economic downturns are mild ones because they are short-lived.
Severe contractions cause widespread unemployment, lengthy factory shutdowns and years of difficulty for those who manage to keep their jobs.
Leading Indicators For Recessions
Many people are wondering if their countries are heading for a recession in 2022.
The leading indicators for recessions are:
- A decrease in consumer confidence
- A decrease in stock prices
- An increase in unemployment
- A decrease in housing prices
- An increase in the number of foreclosures
- A decrease in commercial real estate prices
- A decrease in GDP
While these indicators are not always accurate, they do give us a general idea of where the economy is heading. It seems that we might be headed for a recession in 2022 due to recent trends with stocks, employment rates, and housing prices.
It will be interesting to see how things play out over the next year or two before we can predict anything more accurately. We’ll have to watch carefully for changes in interest rates and whether home values stabilize or continue dropping.
What does this mean for you? One thing is certain- your financial situation could get worse so you should start working on paying off any debt, saving money, and figuring out how you’re going to live without your income as soon as possible.
How To Recover From An Economic Slump
If you’re in the midst of an economic slump, the first step is admitting that you have a problem. If your business has been in a slump for more than six months, then it’s time to take action. The next step is to figure out what caused the slump.
Is it a decrease in demand for your product or service? Are your prices too high? Once you know the cause, you can take steps to fix it. For example, if your prices are too high, you can lower them. If there’s a decrease in demand, you can try marketing your business differently.
The key is to take action and not just sit around and hope things will get better on their own. Remember, this isn’t about you. It’s about your customers. You need to understand their needs and how they see your company. What are their expectations of you? You should always be looking for ways to meet those expectations because that’s the best way to grow your business.
Is Canada Going Through A Recession?
Many people are wondering if Canada is going through a recession. The short answer is: no. The economy is still growing, albeit slowly. However, there are some warning signs that a recession might happen in the next few years.
The loonie has been a little shifty since April and will continue to be that way as long as US-Canada relations don’t improve. A recession is defined as two consecutive quarters of negative growth. If the loonie continues to fall, then there will be negative growth for at least one quarter. In other words, we’re not currently in a recession but our economic future may depend on whether or not US-Canada relations can be fixed in the near future.
What does this mean for Canadians? One thing is certain: high interest rates on mortgages will probably stay high because of less demand for them and because Canadian banks have stricter requirements than US banks when it comes to mortgage lending.
And more expensive mortgages mean more expensive homes which, if prices continue to rise, might mean that first time home buyers who want affordable homes would need to go further out from the city into suburbs where they might need a car commute just to get groceries. We could also see an increase in unemployment.
There’s plenty of talk about peak oil and how fossil fuels won’t last forever. People wonder if that means the world will soon experience an energy crisis like the one seen during the 70s and 80s.
How To Stay Afloat Amidst A Recession?
There are a couple of things you’ll want to keep in mind when going through a recession:
1. Stay Calm And Don’t Panic
Panic is not helpful in any situation but especially not during a recession. You must stay calm so that you can think rationally and make appropriate decisions.
2. Reduce Your Expenses
In order to reduce your expenses, you must first recognize where you are spending too much money. This may include unnecessary trips, food shopping every day instead of once or twice in a week, buying unnecessary clothes etc.
You should also look at ways to generate income such as by doing part-time jobs or taking up freelance jobs online etc., If possible try reducing your rent by moving somewhere smaller or sharing accommodation with someone else who needs it.
3. Cancel Unnecessary Subscriptions And Memberships
Unnecessary subscriptions and memberships add up quickly over time — even if they seem insignificant at first glance — so cancel any subscriptions or memberships that aren’t essential for running your business.
This includes gym memberships that aren’t being used regularly or magazine subscriptions that are only read once or twice before going straight into storage without ever being referenced again.
Final Thoughts
The best way to prepare for the economic downturn is to assume that, even though you will be fine, others won’t be. Be cautious when spending money and don’t take on debt. You can get through most of the rough patches with a little bit of legwork and some careful planning.