In a recession, uncertainty clouds the economy. Though the ups and down of economic cycles are predictable, downward trends can be bad news for families and businesses alike. However, there are always things we are ready to spend money on – from groceries to treats, what stays on our shopping list during recessions is very revealing for our own priorities as well as the qualities of enduring businesses.
The economic bubble builds as asset prices as a result of rapid market behavior; eventually, the bubble will burst when costs become too high for the comfort go investors and huge sell-offs start. This burst leads to recession, and in some cases of especially long or bad downturns, depression. In 1933, the Great Depression resulted in an unemployment rate of up 25% and stayed well above 10% until the early 1940s. More recently, the Great Recession resulted from a massive housing market crash, some effects of which we are still dealing with today.
Valuing up to 75% of GDP and an incredibly powerful force for economic growth, consumer spending is king. Unfortunately, as the economy inevitably turns down, its consumer spending that suffers. Additionally, it’s a great indicator of the current and future economic state; Consumer Confidence Index, or CCI, surveys consumers on their current situation, economic outlook, and predictions for the future. Initial unemployment claims, poor options for short-term interest rates, and building permit insecurity help reveal the coming economic outlook.
Yet not every person experiences a recession in quite the same way. Much like certain industries that thrive in a down economy, so too do certain individuals. From what we understand of retail trends, curiously the global sales of luxury goods rose by 10% in just two years following the Great Recession. Across the board, families within the top 1% saw their income increase by 37% between 2009 and 2015; the income of the other 99%, however, grew just 7.6%.
Retail shopping and typical vices aside, other businesses successfully operating and even thriving during recessions aren’t limited to just discretionary purchases like these. American healthcare, taxes, and funerary services are counted among them, as well. Big picture terms show that following the Great Recession, early growth of healthcare fell by half, but health care spending still grew as a percentage of the US economy itself. Taxes and tax services show similar trends as US accounting firms declined, whilst the job sector itself increased between 2008 and 2013.
Specifics of economically survivable industries notwithstanding, you don’t necessarily need to be in one of these businesses to succeed. Social demand and the general need for goods and services like groceries or healthcare will always be high, but it isn’t enough to ensure survival. Businesses that are prepared for any economy focus on spending, budgeting, and marketing. Perhaps one of the most important pieces of the puzzle is to hone in on core competencies, or simply focusing on being the best in the industry at what your business already does well. Here’s how to make it happen, detailed in this infographic.
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