6 Reasons Why Recessions are a Good Thing!
Yes you read the title right, a recession can be a good thing! With all the doom and gloom talk of recessions, I think it’s time to look at the other side of the coin. That is, the positive aspects that recessions can bring. Even though recession means the shrinking of the economy, it can have many benefits to the everyday person and family.
Who benefits the most from a recession? The Buyer!
- Value Stocks are Plentiful – With recession comes fear in the markets. The human emotion of fear is usually a bad thing for the stock market except if you are a buyer! With strong stocks trading at historically low prices, it can be a field day for investors who have cash.
- Real Estate Buyers Market – If you are fortunate enough to be in the market for a home, then there is no better time to buy real estate than during a recession. With fewer buyers out there, houses are sitting on the market a little longer. This creates a little more motivation in the seller which typically results in lower house prices.
- Cheaper to Borrow – A slower economy typically means that the central banks will jump in and lower interest rates in an attempt to encourage spending. Lower rates means lower debt servicing payments such as mortgages and investment loans. This is another reason why it’s a great time to be a home buyer!
- Retail items are cheaper – With retail sales slower due to consumers cutting their discretionary spending, retailers try to boost their sales by slashing prices. It’s a great time to buy items that you have been saving up for at a reduced price.
- Gas is cheaper – With a global recession, there is a lower demand for oil thus lower oil prices. As oil and gas prices usually go hand in hand, a recession means that gasoline prices are reduced. As of today, I haven’t seen gas prices this low since 2003!
- It’s Vacation Time - Lower gas prices along with less people spending money on luxuries (like travel), makes it a perfect environment for a lower cost vacation. Airline tickets, hotel stays and even car rentals are all reduced in price. Want an example? Disney is currently offering 3 nights free if you book a 4 night package with them.
Recession proof your life by balancing your household budget and create a savings for yourself. The cash will come in handy when things get cheap.