Six Ways to Know the Recession is at Your Door
by Allen Teal on Mar 24, 2009 with 0 Comments
This article looks at the effects of recession as it spreads and deepens. It considers the signs to look for to indicate that it has made it to your house.
Banks are failing. The stock market is dropping like a rock. Businesses are downsizing, and some are closing. Unemployment soars. The news reports spew out negative economic information daily. For most people, these are news stories related to other people in far away places. However, when a recession gets deep enough, everyone starts to feel it eventually. Some of the impact is moderate and easy to take. Other aspects may not be so pleasant. As brief review of the ways that the state of economy hits home will illustrate this point.
Local merchants shutter their businesses.
Even a mild economic downturn can be enough to cause the weaker businesses to shut down. People who use the services of those businesses will feel the down economy although they may not see it as such. Until a major player in the local community is hit, people will tend to just think that businesses come and go.
Layoffs begin at small manufacturers that supply materials to the large manufacturers.
When the Big 3 automakers have problems, it makes the news. Months before the huge auto manufacturers begin to lament their down business cycle, the companies that supply their parts inventory see the sag in sales. This results in layoffs in places that are often remote to the giant car assembly plants. These companies employ from a few dozen to a few hundred people locally. As long as unemployment benefits and other sources of help are coming in, the problem will not get too severe. When the car plants start to close down, these companies can go out of business.
Restaurants and grocery stores shut down.
If enough small plants close, local restaurants and supermarkets loose too much of their customer base to operate. Even if people do not relocate immediately, they will eliminate most of their eating out money from their budget. They will move to discount food supplies and purchase lesser priced (and lower profit for the merchant) goods.
Housing prices start to fall.
Because recessions do not strike evenly across the nation, some areas will still thrive while others are faltering. People will begin to migrate toward jobs. When they do, the housing market in the area being left behind will start to erode. With a surplus of houses available, the prices will drop and sometimes dramatically. If you are unlucky enough to be among the last to try to sell, you will be hurt financially.
Your job may be one of those to be eliminated.
One of the biggest ways that the state of a weak or declining economy hits home is when you or someone in your home loses their job. As jobs are lost, more people are seeking work. This creates too few jobs for everyone to get one. Many people are left without work. Those who do find jobs will sometimes find it at lower pay. When labor is abundant, wages go down.
Having to work for reduced wages can mean personal economic failure.
If you are forced to accept wages below your cost of living, you will see your personal finances erode quickly. This can lead to foreclosures, repossessions, and bankruptcy. In blunt terms, you are out on the street without money and without transportation. This is as bad as it gets. If you reach this level, there is little doubt that the state of the economy has hit home.
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Published in: Personal Finance
