Economic recession is an event that nobody seems to be happy hearing. Every time recession is being mentioned in casual conversations, it seems that everybody participating shudder in fear anticipating the worst.
An economic recession is an economic slowdown that happens in two consecutive quarters. Some economists would say that this is associated with series of events that generally recognized to be “market correction”. What is this series of events?
An economic recession happens when there is more supply than the actual demand of the product. This leads to a decline in the gross domestic product. What happens during economic recession is that it provides a “cooling off” period for creating on new products that will interest the consumers and of necessity.
When compared to agriculture, it is common sense among farmers that the land needs an time interval between the harvesting season and next planting season. Sometimes farmers would plant a different kind of seed that is known to bring and enrich the land again for the next planting season. Somehow this applies in financial and trade markets.
Some businesses would see economic recession as the time to reinvent. Time to innovate and create new products that will create a market hype and again will encourage consumers to purchase goods. Many businesses who have switched their attention in innovating during economic recessions show high probabilities of succeeding.
Since there is a large selection of products in market trying to capture the unmindful consumers, the period of recession accelerates the quality of products being available in the market. Since companies are trying to get the consumer’s money, they would likely to produce improved product quality, improved services at lower prices.
Since there are products that would not sell, this would push companies and sellers to inspect their production methods. This is a good time in filtering out production methods and equipment that compromises the quality, efficiency and speed of creating products.
An economic recession also serves as a wake-up call for everyone to have a balanced spending. Everyone gets a heads-up about keeping saving accounts updated and saving for any event in the future. Unfortunately, some people may learn their lesson in the hard way. There would be some who would be declaring bankruptcy, while in worst cases, there are people who would choose to end their lives. Economic recession would be a good time to rethink a person’s finances.
Some considerable benefits of economic recession is low housing prices. Unless, your in the business of selling houses, low prices is not a good news. However, if you are somebody who is planning on investing and buying a property, a period of recession will help you have the choices that you want. It is also a good time to look for investment properties.
Housing prices are not the only one who has low prices, company stocks are oven undervalued during economic recession. A person who is looking for long time stock investment, recession periods would have stocks that are undervalued because a lot of stock holders are more into selling that acquiring stocks.
MarketWatch mentioned other gains from an economic slowdown. MarketWatch mentioned that this would serve as a wake-up call for overconfident consumers and sellers who are missing out the importance of balancing finance. And also this would serve as a wake- up call for government to have a stricter finance budget since there will be cutback in the country’s revenues.
Although economic recession is considered a negative event, it is time to turn the negative event into a positive situation. It is time to wake up.