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Preparing Your Finances for a Recession

Preparing Your Finances for a Recession

October 06, 2019

Okay, don’t panic. We’re not in a recession. But we need to be practical about the fact that a recession in the future is inevitable and a natural part of an economy’s business cycle.

The economy naturally goes through phases; ups and downs in production of goods and services. There is expansion, peak, recession/contraction, trough. Then you go right back into recovery/expansion.

While unpredictable, each business cycle will have indicators that give insight into the condition of our economy. Think, changes to unemployment rates, new manufacturing orders, or industrial production.

A recession is part of the contraction phase of the business cycle. This is when there are two consecutive quarters of decline in GDP (6-months). Unemployment may begin to rise, and you’ll notice less people shopping or spending their money on wants.

While we can’t predict the next recession or know how it will compare to the Great Recession, we can do our best to plan and make sure we’re well situated.