• Sat
  • Jul 26, 2014
  • Updated: 11:31am

10 Things to watch out for when...A recession looms

PUBLISHED : Sunday, 23 September, 2001, 12:00am
UPDATED : Sunday, 23 September, 2001, 12:00am

What it means: Recession is defined by most economists as two consecutive quarters of negative growth of the USNational Bureau of Economic Research (NBER) defines a recession as a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, income and trade.


Job cuts: A typical, and disturbing, sign of a shrinking economy is mass lay-offs as companies contract. There have been tens of thousands of jobs lost globally in the last week alone.


Shopping decline: A contraction in consumer spending is another typical sign of a recession. If you do not have a job, you may well be spending your time in a shopping mall but not your money.


Out of sync: Historically, the stock markets bottom nine months before economies do. Headlines may be showing bad news on the equity front but somewhere along the line things will turn.


Investing strategies: If you have the guts and can ignore widespread negative sentiment, stick to the old investing adage of buying in the dips and selling on the highs.


Cyclical downturns: Economies cannot keep going full tilt without a breather. Look for opportunities to reinvent yourself or your business to cope with a changing climate.


Keep cautious, keep confident: World economies were already in a downturn before the unprecedented terrorist action in the US. This is a road that none of us have travelled before and caution should prevail. At the same time, giving in to despair will reflect negative signals.


Business unusual: Look for opportunities to enhance your business in a downturn, even if it means deviating slightly from your traditional line of work. Offer value-added services, look for gaps in the market and beef up your sales and marketing techniques.


Things will change: A recession begins just after the economy reaches a peak of output and employment and ends as the economy reaches its trough, according to the NBER. The bureau points out that most recessions are brief.


Look beyond: Unfortunately, not every individual or company has the means to survive the pinch. Build networks of community support. If you escape the downturn unharmed, spare a thought for those in hard times.


Graphic: TRIGGBgwz


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