The recession is not always bad: three positive aspects of the economic crisis

When a recession begins, naturally everyone is worried about the negative aspects. And it’s true that the recession poses many challenges for people. This writes the Money Talks News.

Рецессия не всегда плохо: три положительных аспекта экономического кризиса

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There are some things which actually improved during the recession.

1. Cheap stock

Recession — time to find the best deals. When the stock market falls, you may be tempted to sell and give up what resembles a sinking ship. However, instead of record losses, the decline might be time to find the best deals and buy more stocks, while shares have become cheaper.

The founder of Money Talks News Stacy Johnson recently wrote about the benefits of buying, when the stock price falls: “During the great recession, which began in 2007, the market fell by 50%, reaching a bottom on March 5, 2009, when the Dow Jones Industrial Average closed at 6 594 points (now this level about 20 000). If someone was lucky to buy something near the bottom, you can make money, even after the recent collapse of the market.”

Since then, Stacey wrote these words, the market fell a bit more, but the basic idea remains the same: buying in a low market can pay off in the future.

Of course, you will not be able to accurately predict when a market bottom, but you can still get a good deal on the shares if you buy them when they will be cheaper. Stacy recommends that you consider blue chip stocks with dividends, and also consider index funds. Many of these shares are sold now and may be cheaper in the coming months.

Later, when the market recovers, your hunt for discounts can pay off. Of course, there are no guarantees, but using the decline in the past always pays off in the long run. Most likely, it will be this time.

2. Lower mortality

Interestingly, the mortality rate may fall during a recession. A recent study showed that between 2005 and 2010, a period that included the Great recession, the mortality rate actually decreased as unemployment in urban areas increased.

One of the biggest contributions to the decline in mortality was the reduction of mortality from cardiovascular disease. Road accidents were another category, which experienced a decline in mortality.

Although there is no direct connection between the recession and lower levels of mortality, one of the authors of the study shared a theory about why mortality may be reduced during economic difficulties.

“When the economy is worse, people spend less money. They are less likely to go out and eat junk food, smoke less or drink less. They can drive less. Therefore, the increase in unemployment is associated with reduced mortality,” he writes.

Perhaps we need more information to determine the causes of lower mortality rates during the recession, but the decline in mortality may be one of the positive aspects of the situation.

3. People overestimate that importance for them

Many people overestimate their lives in times of stress, thinking about their budget priorities.

In early 2009, during the great recession, the savings rate increased to 6.9% — the highest level since 1993, according to the report of the time. It is also a jump in the savings rate, near zero in early 2008.

By January 2020, the savings rate was 7.9%, according to the Bureau of economic analysis. A sharp increase from a zero savings rate to almost 8% after a dozen years shows that, because people are more worried about economic conditions, they have shifted their priorities towards savings.

In addition, they can also consider other options of living during the recession. Many people are rethinking what it means to have a good life in difficult economic times.



the recession