How does a recession affect the average person?
Oct 14, 2008 in
Economics
moira77
I keep seeing news about the fact that a recession may be coming. I am curious as to how this affects a normal person, not involved with the stock market etc. For instance, will prices go up for food, clothing, etc? Are there any ways to prepare for a recession? Any ways to benefit from a recession?
I keep seeing news about the fact that a recession may be coming. I am curious as to how this affects a normal person, not involved with the stock market etc. For instance, will prices go up for food, clothing, etc? Are there any ways to prepare for a recession? Any ways to benefit from a recession?
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2 comments
richard t on October 17, 2008 at 2:57 pm
prices go down during a recession(less dollars chasing the same amount of goods..)………………If you don’t loose your job, it will be fine……………….as far as 401k and IRA.s..move to cd’s .they don’t go down in value…………..
Michael T on October 19, 2008 at 4:32 pm
The best way to prepare for a recession (or anything for that matter) is to have as little personal debt as possible. Having a six-months-expenses buffer of easy-to-get-at cash (e.g. bank accounts, redeemable CDs, &c) is even better. The main risk for someone working for salary and not invested in the stock market is that they’ll lose their job, and if you can honestly say, “if I lose my job I’m good for a while until I can find another one”, you’re golden.
Prices *should* go down during a recession, but may not because of price stickiness. The rising cost of gas may force some staple goods up in price as well if they need to be transported. If you shop farmers markets for veggies, your food bill will probably be OK. If you’re a fan of imported French cheeses, maybe not.
As for benefiting from a recession, if you’re not in the stock market, the middle of a recession is a great time to start being invested in the stock market, since everything will be on sale. Also if you’ve been thinking of buying a house and have good enough credit to land a mortgage, houses are very much on sale, too.