4 Reasons to Celebrate the Current Economic Recession
| By Jacob Inman | Category: Career and Personal Finance
Have we moved past the age of consumerism? Photo by Andres Rueda
For the past year and a half, we’ve heard nothing but bad economic news. Home prices continue to crash, investment portfolio balances have largely disappeared, and the unemployment rate has skyrocketed to nearly 10%. The economists (at least those with some political motivation) tell us that the worst is over…I guess we’ll have to wait and see about that.
It’s difficult to sell the idea that anything positive can result from a recession to someone who has lost their job, or even worse, their home. No doubt, the current economic environment has caused a lot of trouble and heartache for many.
However, as with any difficult situation that life brings our way, we can usually find something positive to point to if we try – a silver lining, if you will. Here are 4 reasons why the economic recession should bring joy to your life, both now and in the future:
Entrepreneurship Flourishes
Those who become unemployed during an economic downturn often choose to follow an entrepreneurial dream they’ve had for many years. The loss of what was thought to be a secure, well-paying job often prompts people into action as many view the situation as an opportunity to start their own business and be their own boss. For this reason, the positive downstream impact of most recessions is a sharp increase in innovation and a renewal of the entrepreneurial spirit. Innovations, particularly those of small businesses, have the ability to push the economy to new heights in the future.
If you’ve lost your job (or think that you still may), consider working towards building a business of your own. Even if you choose to go back to work full-time, it could provide an additional source of income going forward.
Our Bank Accounts Grow
The U.S. savings rate provides a measure of the amount of our personal income that we choose to save. At the height of the economic bubble several years ago, the personal savings rate was actually negative, meaning that, on average, Americans spent more money than they made. Recently, the savings rate hit a 15-year high as consumers slowed spending and started saving.
While a decrease in spending limits the fuel for economic growth and an end to the recession, an increase in savings lessens our reliance on credit cards and other consumer debt – a factor which contributed greatly to the current economic mess we’re in.
Things Are Cheap…Relatively Speaking
With the rupture and continued deflation of the housing bubble, home prices in many markets look like a bargain compared to pre-recession levels. Interest-rates are low and many stocks remain undervalued creating a great buying opportunity. It’s also relatively easy to find bargains on large-ticket items such as automobiles, household goods, and travel.
Although the risk of significant inflation seems to be somewhat mitigated, don’t wait too long to buy these items (only if you can truly afford them, of course). Once the economy starts to pick up steam and buyers return, these great deals will disappear quickly.
Lessons Learned for the Next Generation
Will the recession end our incessant need for more and the mentality of consumerism that has become the norm in American society? I doubt it, but we can be hopeful that there will be a shift in our way of thinking that leads to a much simpler life where we learn to live with less.
Parents would be wise to pass the lessons learned through this recession onto their children so as to positively influence the spending and savings habits of the next generation. Education specific to personal finance could go a long way towards lessening the impact of future bubbles and the resulting recessions that are sure to come.
What lessons have you learned from the current recession? What changes have you made to your financial habits as a result? Please share your thoughts with the RYL community in the comments section below!
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I never really thought about the recession like you have presented it. I am fortunate to still have a job and have actually managed to pay off some debt during this time. Still, I like the fact that you have highlighted the positives of this difficult time!
Thanks for the uplifting information… I am tired of listening to the negative news each day.
4 simple points…very nice, thanks for the positive approach as Greg stated.
Things I learned from recession – cut back:
1. Unplug appliances or electronics that I don’t use to reduce power consumption.
2. Constantly turn off lights after my wife and nanny.
3. Decreased eating out or going to restaurants.
4. Work at new ways to save money every day.
There are definitely some positives that are coming out of this recession. It has made many people become more fiscally responsible. I think this is a good thing. Also, as you have pointed out, it is a buyer’s market in many areas. If you have cash to invest, now is a great time to do it!
@ Tonia – Great work in your continued focus to pay off debt!
@ Trey – Thanks, you proved the article right in that people have considered that they need to make positive changes as a result of the recession. I like your list of cutbacks.
@ Jeff – It really is a buyers market. Let’s hope we all keep these lessons in the front of our minds as the economy rebounds. Thanks for your comment!
I guess its good to focus on the positives instead of the negatives (job loss, high cost of health care, etc). It really is a a good time to invest right now!
I avoid getting too engaged in the negative stories. I also like to think and hope to continue to build a business that is recession proof. In fact, it will be great if business continues to soar even if the economy is bad. Now…that is what I call an evergreen and growing product or business!
@ Carla – You’re right! Get that money working for you by buying low!
@ Evelyn – Great point. Building a recession-proof business is possible, especially if you are providing great value to your customers by offering a service they see as beneficial and necessary.
Thanks for contributing!
Jake
I can now see how bad the recession is coming too, I lost my job the other day and i will now be late for my rent which is due tomorrow, I currently have no pay which means i have no idea when i will have the money for the rent, i must find a jobbb!
@Eric – I have been in your situation before several years ago so I totally understand what you’re going though and I’m very sorry. Right now, the best thing you can do is be upfront with your landlord NOW. Dont wait until rent is due or overdue to let them know what’s going on.
In my case, I was able to make an arrangement to spread the rent payment over the month. I also helped my landlord paint some units to be rented. I had to get very creative during that time.
The best of luck to you!
Actually saving money is good for individual but not the country. Once all the people starts to accumulate money, then lot of problems for the country.
yes, good points were made in this post and in about a million others. But, why dont people ever talk about why we got into this mess in the first place?
Yeah, banks gave money to everyone that wanted to buy something. But, we cant blame the bacnks. Who to blame? Your banker, car salesman, realtor. They are the ones that force you into something you cant afford and work hard to make sure you get financed. Funny thing is, thos same people that scrued this economy up are the ones that had the worst falls. They diserve what they got, but sucks that it also affected millions of other people.
Lessons learned.
@ Paul – That’s an interesting way to look at the recession, I haven’t heard the idea of blaming the salesmen…How about taking it a step further and placing some of the blame the shoulders of the people who made the decision to overspend and take on too much debt?
Jake
Cute that ur calling it a recession, it’s a depression that’s artificially being controlled through injections and limiting inflation through some very arbitrary practices that won’t show now, but will catch up later in at least 10 years time.
There’s some good, but people really haven’t seen the worst yet. Looking to a brighter side, the generation growing up before haven’t experienced a full depression and that’s about the reason why this whole thing started – because people were frivolous with their money and hopefully they’ll learn from that now. But I wouldn’t bet on it.
I agree with all four reasons posted. I think there are many ways businesses can flourish during recessions. There is also a great new book out about innovation during recessions called ‘Exploiting Chaos – 150 Ways to Spark Innovation During Times of Change’ by Jeremy Gutsche. You can find more information about it at http://www.exploitingchaos.com.