Is a Recession Heading Our Way?

  • Web searches on "how to prepare for recession" are up by over 1,000% on 2018.
  • Many experts suspect a recession is on the horizon.
  • We are currently in a prolonged period of "expansion."

When you’ve been in business for a while, you start to develop a keen sense of when things aren’t quite right.

For example, you may notice that traffic to your website or footfall to your shop seems no different, but that sales are still steadily falling; You may experience an increase in late payments, or perhaps just sense that people are becoming more reluctant to make commitments and decisions.

Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. In the United States, it is defined as “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”.

These things are often signs of lower consumer confidence, and can be the harbingers of a downturn or recession.

As such, I’ve been concerned to observe them over the past few months. Having struggled through a recession before, I was obviously keen to know if I should expect another one. Unfortunately, my findings weren’t particularly encouraging.

What do the Experts Think?

Financial experts broadly concur that we can expect a recession soon. When the National Association for Business Economics spoke to 226 economists, 72% predicted a recession in either 2020 or 2021.

Meanwhile, The New York Times describes the current US yield curve as a “storm warning” for a future recession, and the manufacturing index forecast as “mostly cloudy.” Consumer sentiment in the US is flat but stable, which provides slightly more positive news. However, as the paper points out, countries are often already in recession by the time the statistics begin to show that people have stopped spending.

A Possible False Alarm?

Of course there’s absolutely nothing to say that an impending recession is certain. Some indicators are positive right now, especially low unemployment figures in both the US and the UK.

In the United States of America, the U.S. consumer confidence index (CCI) is an economic indicator published by The Conference Board to measure consumer confidence, which is defined as the degree of optimism on the state of the U.S. economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country-by-country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends.

These two nations are also in periods of uncertainty, which can cause people to slow down spending and switch into a “save and prepare” frame of mind. The UK is still embroiled in the chaos of Brexit negotiations at the time of writing, and the US faces a Presidential election next year, along with the possibility of an impeachment in the meantime.

Anything that brings more certainty is a good thing. In the UK especially, it’s only logical that people are delaying decisions – from business ventures to consumer purchases. Any kind of certainty around Brexit will finally allow people to progress.

What do People Think?

This final question brings us on to the most enlightening part of the story.

Whilst researching the chance of a new recession, I used KWFinder, an Internet keyword research tool, to look at how many people were searching the web for recession-related terms.

I discovered that in summer 2018, searches for “how to prepare for recession” only numbered around 2,100 per month. In August 2019, this rose to 27,000. This represents a staggering increase of over 1,000%.

As discussed above, a recession in the coming years looks likely, but not definite. However, one thing that’s for sure is that people are worried – and much more worried than they were a year ago.

It seems prudent to hope that these people don’t tighten their belts too much, and in turn make the next recession a self-fulfilling prophecy.

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Ben Taylor

Ben Taylor has been a freelancer since 2004. He's a writer, internet marketer and all-round techie, with a passion for helping others realise their dreams. Ben founded Home Working Club, a popular freelance portal, back in 2019. He also provides coaching to aspiring writers and bloggers at www.writeblogearn.com.
http://www.homeworkingclub.com

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