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What Is A Recession and How Will It Affect You

Updated on January 22, 2009

There has been a lot of talk about the United States heading toward a recession lately. Now there is evidence that we could already be in one. What does that mean to the average person?

According to the Merriam-Webster site a recession can mean three things. One - the act or action of receding. Two - a departing procession. Three - a period of reduced economic activity. Obviously we are talking about definition number three here.

When it comes to the economy, a recession is not what you want. Typically the nation's economy has to be doing poorly for at least six months before the officials start talking about a recession. There has to be a trend. There are many reasons a recession could start. Something might happen with the stock market or in the business world that scares consumers, which we all are in some way or another. Something that makes people hang on to their money instead of spending it.

Reduced spending by the consumer means companies have to reduce their output. If this happens for long enough it will mean a reduction of jobs. When people become unemployed, they typically stop spending. The more jobs are lost, the less the consumers consume. The less consumers consume, the more jobs are lost. It turns into a vicious cycle.

When a lot of people are unemployed, there can be fierce competition for jobs. When a lot of people want the same job, companies don't have to pay as much to get someone to fill the position. Suddenly you have people with degrees delivering the newspaper or working any job they can in order to make some money to feed their families. In times of recession it is very important to hold on tight to your job as best you can. No, you can't always control this, but don't, for any reason resign, thinking that you can easily get another job.

During a recession there are too many people looking for jobs. It isn't just the people that have recently become unemployed that are looking for work. As children become teenagers, they will begin looking for work. As people graduate from high school and college they will begin looking for work. Moms that have previously stayed at home with their kids could be getting back into the work force. These people will be looking for jobs right along with the newly unemployed.

What can you do to protect yourself in times of recession? Having a secure job is number one. We can't all have a secure job; however it is something to consider and do what you can to ensure you have one. Have money in the bank. Having an emergency fund to cover necessary expenses is a must in times of economic problems. Reduce your monthly payments - as in reduce your debt. Try to payoff anything that you can. Having less monthly obligations means that you could take a job that might pay less and it won't impact you as much.

Make a budget and stick to it. Save as much money as you can. Don't take on more debt, or spend a lot of money on something not completely necessary during a recession. Stick to your budget! Don't just have three months of money in the bank. Have three months of food and toiletries in the house as well. It is like an edible emergency fund. If you are struggling to pay your bills one month, then at least you won't have to worry about groceries. Eat from your stockpile and use the food money to pay your bills. It could make the difference in whether you have electricity or not.

If we are in a recession it will likely impact everyone in the United States. How severely it impacts you depends on what you do to prepare for it. Making sure your finances are in order and being proactive in protecting you and your family will make a recession a lot easier to deal with.



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    • profile image

      black hammer 2 years ago

      i like cheese and french frices

    • monicamelendez profile image

      monicamelendez 5 years ago from Salt Lake City

      I think I've been really fortunate through the current recession. I honestly can't even really tell that it is one! Great article!

    • profile image

      Homestubed 5 years ago

      Let the big businesses fail with their pandering politicians, so that we can get back to business as usual...

    • profile image

      Rachel 5 years ago

      Good job!!

    • Chris Achilleos profile image

      Chris Achilleos 6 years ago

      Very informative hub Jennifer. Voted up, interesting, useful and sharing :)

    • profile image

      silvana 6 years ago

      great article. Very simply explained to all.

    • lmonline profile image

      lmonline 6 years ago from Brazil

      Great article. Congrats

    • dablufox profile image

      dablufox 6 years ago from Australia

      Being an investor and trader I have to admit that I don't really mind recessions. They produce cheap stock prices and very attractive price to earnings ratios across a country's stockmarket. Living in Australia, the GFC what a great opportunity of sorts. Although I do feel for those who naively got caught up in the US property boom, but its a person's greed that often causes their undoing. There's a great documentary on DVD called 'Inside Job' all about the big US banks and how they screwed the American taxpayers for billions, actually Mat Damon is a commentator in the doco. I must see movie, especially if your an American taxpayer.

      Love you Hubs Jennifer, big fan!

    • profile image

      Multiman 6 years ago

      Good article voted up

    • profile image

      Johnny Bridges 7 years ago

      Thank you for this hub about the recession. A particular career that's pretty much recession-proof is trucking. There will always be goods that must be transferred, and truck driving jobs will be in demand. Just a thought...

    • ANISTON profile image

      ANISTON 7 years ago from Lincoln NE

      I believe we are actually in a depression hidden by modern amenities.

    • profile image

      daisia 7 years ago

      the receession is just similar tew duh great depresion

    • profile image

      hattersmen 7 years ago

      I think the recession never ended !

    • profile image

      holly 8 years ago

      i love this page is will make people think about what they are doing

    • profile image

      Daniel 8 years ago

      Thanks for the explanation(hub), because of you now I have clear understanding and the over all picture of what we might be up against in south africa.

    • profile image

      martha 8 years ago

      that's a great article jenny.

      god bless ^_^

    • apeksha profile image

      apeksha 8 years ago from India.

      Oh! Jennifer thanks for writing on this heart touching subject.

      People who have lost their jobs can understand value of this hub.

    • profile image

      bavneet kular 8 years ago

      i think this article was awesome for me and i liked it a lot so i hope things get better soon

    • profile image

      shravan 8 years ago

      I really like your article. nice. keep it up.

    • profile image

      Covert Hypnosis 1 8 years ago

      Thanks, I think everyone should know about this these times. If we know what a recession is and how it affects us, we can prepare and shield us.

    • profile image

      Joe 8 years ago

      It is important to not that recessions are a natural part of a free market business cycle. Unfortunately, the Obama administration and the current congress are behaving as though the government can control and prevent recession. They are either foolish or being dishonest.The only way government can control a recession is if there is no growth.Obama has said he wants to end the boom-crash cycle. His economic policies are engineered to produce economic stagnation and an end to prosperity.He should be clear with the American people in what he means when he says he will end the boom-bust cycle. It seems the Government is making a genuinely bad situation unnecessarily worse with bad policies.

    • profile image

      Mxolisi 8 years ago

      well this is an informative hub. what comes to mind though is what role did derivatives play in structuring this recession? i'm sure CDO's were the main cuplrit together with un checked lending so i'm hoping the government has learnt its lessons now!

    • midnightbliss profile image

      Haydee Anderson 8 years ago from Hermosa Beach

      nice hub and good advise, thanks for sharing

    • tony83 profile image

      tony83 8 years ago from NYC

      Good Post. Check my blog for Free and Easy Ways to Make Money in a Recession.

    • profile image

      marcial 9 years ago

      great. very timely for everybody now seeking valuable information, an answer to a much controversial realities an ordinary people want to get to know about.

    • narindia16 profile image

      narindia16 9 years ago

      Very nice post. i too believe that things will become better soon.

    • profile image

      omarc 9 years ago

      great hub thanks for the info

    • profile image

      believer 9 years ago

      As a christan I bekieve that fellow believers should not be in a RECESSION state but a POSSESION state....something for christians to think about

    • kappa022 profile image

      kappa022 9 years ago from Florida

      Very useful hub, during times like these, we need all the help and preperation we can get.

    • marisuewrites profile image

      marisuewrites 9 years ago from USA

      Great info and good comments from all, I think we'll get thru this with some creative thinking and optimism. We need to be solution focused, we're already in the ditch, now do we roll around in the mud, or figure out ways to climb out!!

      I'm advising my kids to focus on inexpensive or homemade good times and fun; take any job that is something they can do, look for more than one way to make a buck, and do it!! Be ambitious in healthy ways, frugal, and use their head. By the way, that's good advice for me, too! =))

    • Kulsum Mehmood profile image

      Dr Kulsum Mehmood 9 years ago from Nagpur, India

      Very informative hub jennifer.

    • profile image

      amir 9 years ago

      explaination of that saying of the prophet (pbuh):

    • profile image

      amir 9 years ago

      Great post. I hope the recession melts down california's real estate hard... it's become impossible for first time home buyers to buy a house.

      in the mean time, yeah, i hope i keep my job :-)

      The prophet Muhammad (peace be upon him) said:

      "Moderation in spending is half of one's sustenance,

      friendliness towards people is half of one's intelligence,

      and asking good questions is half of one's knowledge"

      ... that first one, about watching spending will be key during the recession.

    • profile image

      Dan 9 years ago

      This is garbage. Advising people not to spend during a recession is only going to contribute to the recession. Aside from people who have actually lost their job, now is the perfect time to spend. Everything costs less. If you NEED that new TV, go get it. You'll get a great deal and help the economy at the same time. Stuffing your money under a mattress will only prolong the current recession.

    • profile image

      thatguy 9 years ago

      And Albert... does it matter if she used the word correctly? The point is she gave some very good advice and it is very much appreciated. Get a life.

    • profile image

      thatguy 9 years ago

      And Albert... does it matter if she used the word correctly? The point is she gave some very good advice and it is very much appreciated. Get a life.

    • profile image

      thatguy 9 years ago

      And Albert... does it matter if she used the word correctly? The point is she gave some very good advice and it is very much appreciated. Get a life.

    • profile image

      thatguy 9 years ago

      PRESIDENT OBAMA!!! He will solve this problem that Bush got us into!

    • profile image

      mesothelioma 9 years ago

      Albert I was also about to point out this error. But she has done a great job.

    • roastedpinebark profile image

      roastedpinebark 9 years ago from Iowa

      Thank you for this informative hub!

    • profile image

      Albert Beatty 9 years ago

      Maybe I should get a job as an English teacher or a content editor. Your title is incorrectly using 'EFFECT'. The economy will affect me or it will have an effect on me....

    • profile image

      malenurse 9 years ago

      that is very good info. i see if that will help

    • tommen profile image

      Tom 9 years ago from Irvine, CA

      Thanks for the info! I know a few good ways to make your online business blog recession proof.One of the ways is to write good and interesting content.

      Tom Lindstrom


    • profile image

      Impact 08 9 years ago

      I think everyone here who has posted a comment has done great. Although I will say the economy is what we create it to be. If we create negative we will get that much back its so simple the world focuses on negative. We are taught throught our lives that negative causes misery, it does. If the world could just stop for 30 minutes and truly think of nothing but positive the economy would fix itself. Everything would be running as it was before but stronger. Is this possible oh yeah without a doubt cause its positive thinking and its good. I truly stand by what I'm saying at 100% You have too create the positive, in order too see the good. As much as you create you will get back double. What do you want you have too say to yourself. Really put out in detail what you truly want. I speak mostly of positive and I thrive on it. I see things only someone could imagine yet its so real and has its worth.

    • joer4x4 profile image

      joer4x4 9 years ago from Philadelphia, PA

      Nice hub.

      I would venture to say that there is no secure job.

      From a purely economic view no one can survive it if the money is not worth anything.

      We are in and have been in a recession for a long time.

      Reviewing history, the Great Depression was caused by poor government policy and interference (regulation). The same is happening now on a far greater scale.

      What brought us out of it was WWII? The orders from European countries for weapons to fight the Germans.

      Be wary - as the our national debt grows toward the trillion mark it has to be paid for. Right now the Fed is paying by printing more and more money. But each new dollar that goes into circulation devalues existing dollars (that's inflation!).

      This is just the tip of the iceberg. You will see government at all levels grow and soon more taxes will follow. Because your politicians insist on throwing your money every which way it will cost you more to survive.

      If your not willing to vote them out (I think it's already too late) you better practice your spelling D-E-P-R-E-S-S-I-O-N!

    • profile image

      Erick Smart 9 years ago

      Very good advice, You gave a lot of good sounding advice.

      you just need have control of yours credit cards!!!!

      I Invited you to read my hubs:

    • profile image

      jman 9 years ago

      It doesn't "EFFECT" you; it "AFFECTS" you - just a tip on proper usage. Don't worry - 99.9% of the known universe has trouble with 'effect' vs. 'affect.'

    • profile image

      Smiley 9 years ago

      This is surely very useful information which a common man can understand. Thanks!!!

    • Grumppa50 profile image

      Grumppa50 9 years ago from Canada

      I wish I could have saved up to be more prepared for what's is to come and It's never to late for anyone to clear up messes no matter what.This year my goal is to clear up my own personal fincial debt and stay focussed on oporyunity.Great read.I've learned quite a bit today.

    • Research Analyst profile image

      Research Analyst 9 years ago

      These are much needed tips to make the transition from a booming economy to a down economy. Plus you touch on a topic that is on everyones minds right now, concern especially for those who have jobs but they are not certain how things will turn out, especially with budget cuts. Hopefully things will not last too long, but it has been predicted this will be a long recession, which can only mean more people will be getting online to try and make ends meet.

      Great hub, thanks!

    • profile image

      Tom Kubik 9 years ago from Atlanta, GA

      Are country is so screwed up right now with all are issues!!!!

      We have dug are self in such hole its going to take a few years before it gets better..

      will get through it

    • Scott Mandrake profile image

      Scott Mandrake 9 years ago from Alberta, Canada

      This is some great information, although it only really applies to those in the middle to upper class. The sad fact is that in the US and Canada, the greater majority of the population is not in a position to save money. We talk of being in a ressesion, however the ramifications of a depleted job market have been in full swing for almost a decade now. These people will have to suffer greater hardships than a trip to the food pantry. For my part, I just plan to stick to my new years resolution and hope for the best.

      great post, please keep up the good work

    • mdvaldosta profile image

      Joe 9 years ago from Valdosta, GA

      Some good, basic info everyone should adhere to if possible.

    • profile image

      aniva mainali 9 years ago

      gr8 post!! an eye opening article and of course thank you for simplyfying true meanig of recession..

      Time to Save

    • profile image

      Shiv Kumar 9 years ago

      Simple and to the point...honestly, i was wondering what the whole thing means to me though I am in India. Well, I guess it means to prepare.



    • profile image

      Lisa Nance 9 years ago

      I'm so glad someone finally explained this in easy to understand terms, Thank you for this mcuh needed hub!

    • ameenOs profile image

      ameenOs 9 years ago from Singapore

      this article reminds me of the economic paper i did in the college..great hub!

    • DrJim profile image

      DrJim 9 years ago from Oklahoma

      great post you are right. more people need to think about this

    • houseplus profile image

      houseplus 9 years ago from New Zealand

      I just found this page today (just joined) I must say this is dead right!

      I think looking outside the box for solutions is our best option and at least

      this one is not as bad as the old days.

    • Bruce Elkin profile image

      Bruce Elkin 9 years ago from Victoria, BC Canada

      Great hub. ONe other tip about recessions. It is also a time of opportunity. I just saw a bit on a local brewery that whipped up a batch of "Bailout Bitter" and has been selling out their production runs. In their pub, they're serving a "blue plate special" -- a simple, cheap, wholesome meal -- like diners did in the depression, and the place if filled to capacity.

      In my hub "Staying Up In Down Times" I suggest a set of skills and a framework for creating what you want -- in spite of circumstances. It's good to be frugal, and watch your job and your money, but recessions are also time when new businesses are started and new products invented.

    • megamass profile image

      megamass 9 years ago from Portugal

      Great post! Thanks for the information!

    • profile image

      Jamster2759 9 years ago

      Keeping the debts low are the secret. It is why so many people spend and spend. Great hub, simple but powerful.

    • Ray Saunders profile image

      Ray Saunders 9 years ago from Raleigh's amazing that this was written ten months ago! It looks like nowadays we are right in the pit of it. When this was first written I was out of a job for nearly a year...thank goodness I got two of them now before it got worse.

      I certainly hope things get better in due time!

    • josephdiego profile image

      josephdiego 9 years ago from Eastern Long Island , New York

      Very, very Informative. However the lessons and the precautions that we apply during these hard times. Can be an asset. We should carry ourselves very careful and thrifty manner all of the time, not just when everything else around us is falling apart. This way we will always be ready for whatever. Let these hard times inspire you.

      Peace, Love, Life, Health, Happiness and Massive Success JosephDiego

    • profile image

      Nicko 9 years ago

      we in oz couldn't care about use as long as china keeps buy our resourses we should be alrightish after all thats why we are the best off place to be so come on USA investors invest in us and ozzies should buckle up and save and be smart and only bye australian owned food and cosumers products

    • profile image

      Neville Subedar 9 years ago

      Great article except that not only do you want to control your debt but you want to, at the same time, increase your income. That's a double whammy!


    • gpetrou85 profile image

      gpetrou85 9 years ago from greece


    • profile image

      wakeupobamafans 9 years ago

      Lot's of good common sense talk about Job's and what a recession is all about. People who realize the value of a job. I hope I'm wrong but it Looks more and more like Obama,Pelosi and Reed will be trying to fix this economic with Money Bandaids supplied by the people who have Jobs. And yes J O B S is a not a three letter word. It will only be a matter of time when Taxing the Job Creators will Create more un-employement. The only J O B S that Obama and Biden care about are the ones the campaigning for.

      You have been warned and there's still time to change this.

    • profile image

      Reddy Narayan 9 years ago

      Dear Jennifer,

      Appriciate your efforts in writing this article . very very .... usefule article i found for my MBA assignment . you wrote exactly key words what current economies facing ....

    • profile image

      Jontheretired 9 years ago

      People get exactly what and who they vote for and yet they never seem to learn. And they are about to put pretty much those same people back in office again whether they be Democrats or Republicans. Thank Goodness I am fortunate enough to be in a position where I am unaffected by recession or depression. But I have children and grandchildren who feel the effects of these things. Nice source of information and the comments seem to be sensible and respectable.

    • kerrythecook profile image

      kerrythecook 9 years ago from UK

      Here's one on getting through the crisis:

    • bitsdawg profile image

      bitsdawg 9 years ago

      I cannot believe that some people are still denying that the economy is in trouble, and even more were denying it publicly just a few weeks ago. It makes me sick. These people are either deluded, and should not be leaders, or they are liars, and should not be leaders.

      Anyway, employment figures are scary too, and they get scarier with every new report from the federal government.

      Here are some tips on preparing for unemployment:

    • chriseldridge profile image

      chriseldridge 9 years ago from Brisbane, Australia

      You make some great points about defensive strategies, but I also believe it is the time to invest in yourself as it can represent an opportunity to stand out from the pack.

      I describe this a bit further at

      Invest in yourself and your skills.

      Best wishes


    • profile image

      kioti 9 years ago

      This is nonsense! If you want something you buy it then let the Banks & Feds sort it out. Why should we have to do without, while the CEO'S, Politicans, are making plenty of scratch for the fine way they been guarding the hen house. They should be the ones either paying for this diseaster they've created or sentence them all to the salt mines. So pitiful! Time to go out and BUY big time whether you can afford it or not.

    • sharonsarah profile image

      sharonsarah 9 years ago

      Good ininformation was given about recession. I am so much impressed by your hub. This is uite interesting.

    • profile image

      Lily 9 years ago

      My advice is for everyone to read this article. It is clear, simple and to the point.

    • profile image

      subprime crisis 9 years ago

      found it while researching the topic, very informative.

    • profile image

      keisha 9 years ago

      Great article and simply put for those looking for some insight on how to handle this current situation.

    • profile image

      doctorloanusa 9 years ago

      Making a budget and sticking to it is the best advice on here. You have to sacrifice! Period... there's no way around that.

    • profile image

      John 9 years ago

      Good read - on a positive note most recessions last 10 months according to an article on and the maximum on record has been 3 years. So as you said, if you hate you job and really want to move, tell yourself -- "hold on for another 10 months!!"

    • Chris Fletcher profile image

      Chris Fletcher 9 years ago

      Good points! You need to think smarter during these tough times, that's for sure :)

    • profile image

      Ronald Daniar 9 years ago

      I am on job recession now. Luckily I have saved mmoney for living a couple of months ahead.

    • sheryl c profile image

      sheryl c 9 years ago from canton ohio

      Very great Hub straight to the point you are very right one food prices are very high. No one can afford to put out all this money for gas someone has to stop all of this and I don't think it will be soon.

    • 02SmithA profile image

      02SmithA 9 years ago from Ohio

      Nice post, everyone needs to brace themselves now because it looks like it is happening.

    • pgupta profile image

      pgupta 9 years ago

      It is nice article. With oil price scaling new high is recession knocking the door????

    • RyanRE profile image

      RyanRE 9 years ago from Bellingham, WA

      Nice Post ~ Of course the problem with saving money during a recession is that you are not spending money. If you are not spending money, then you are helping prolong the recession. It is tough stuff.

    • Mici profile image

      Mici 9 years ago from Australia

      Lots to think about here. If we learn anything from these turbulent times hopefully it is to work together, value family and appreciate what we have today.

    • 2patricias profile image

      2patricias 9 years ago from Sussex by the Sea

      Interesting Hub. I like making meals from food in the store cupboard - sometimes end up with a completely new dish.

    • profile image

      polcastillo 9 years ago

      thank you! this is very interesting that every citizen (not only from the US) show know about.

    • stevemark122000 profile image

      stevemark122000 9 years ago from Southern California

      This is very good advise ...thank you

    • Sandilyn profile image

      Sandilyn 9 years ago from Port Orange, FL

      I appreciate your post. This is something that everyone should be thinking about. Preparing for what is happening. We are affected. If not now, soon. So many people live on credit and rely on their jobs, but with prices going up and so many unstable factors, all jobs are at risk. We must all tighten are belts. The road ahead is going to be rockier before it all evens out.

    • Gadzooks profile image

      Gadzooks 9 years ago from United Kingdom

      Unfortunately its not just the US facing this problem... troubled times ahead if the press are to be believed...

    • profile image

      hetjt00 9 years ago

      We are already in a shallow recession with very slow growth in the first half of 2008 with some modest improvement in the second half of the year. Expect GDP to be between about 1.5 and 2 percent for the year.

    • kari dean profile image

      kari dean 9 years ago

      I really enjoyed this, must reading for the talking heads at CNBC who seem so afraid to utter the dreaded "R" word.

      kari dean

    • profile image

      Sonja 9 years ago

      Thank you sooooo much Jennifer. I was just at another site trying to understand what this whole thing means to me and my family but it was very vague. Thanks for getting to the darn point!!

    • profile image

      bradngd 9 years ago

      Good post and sage advice on getting a budge tand sticking to it. I thin kit is also a chanmce for us to sit back and take notice on what we spend money one, do we really need a new phone that often, do we need a new car, or is it a chnace to grow a veggie garden and save money that way which in turn helps the environment. While no one want a ressesion it could be a chance to make a positive change for the future

    • ONetBusiness profile image

      ONetBusiness 9 years ago

      There were reasonable points stated in this article. You're right on target in explaining how a recession is related to consumers spending less. Check out my article on why airline flights could be limited to none or very few in the future; I think you might like it.

    • profile image

      Projectbox 10 years ago

      Great info! Adsense approved too : ) check out my site aswell ...

    • profile image

      excellasys 10 years ago

      Some interesting and unique tips, not sure were I would put 3 month of food though. I'd need an entire garage for my family ;-)

    • Gareth Pritchard profile image

      Gareth Pritchard 10 years ago from North Wales

      Very good advice, the problem is I live like that now and I can't squeeze any more out of that which already squeezed to the limit.

      Thank you, Gareth.