How do you prepare for a recession?

At the risk of sounding hilarious, I find the tone of the economic news quite heavy. The most important question of the hour: Are we heading towards a recession? Discount bets: 35%, 50%, 75%?

What characterizes the stagnation is that we’ve been speculating about it for months, and we won’t receive confirmation until after it’s behind us. Technically, we should record a decline in economic activity for at least two quarters. In this regard, data always tells about the past.

On a daily basis, we do not care about fluctuations in GDP. What are the important impacts: Will we lose our jobs? This is the fear raised by talk of a recession.

Could this happen?

How do you prepare for this possibility?

Back to the future ?

By raising interest rates too quickly to curb price hikes, are central banks paving the way for a recession? This is the case.

It brings back the ghost of the ’80s.

I’m not referring to Rick Ashley, but to the really persistent inflation at the time, which peaked at 12.5% ​​at the beginning of that decade, and the response of the Bank of Canada, which raised the interest rate ceiling (mortgage rates reached 21% in 1981). It hurt the economy despite vague similarities to the current situation, it has nothing to do with what we are going through.

Interest rates, although rising rapidly, are still historically low. It’s true that the family debt was less when the album was released excitement For Michael Jackson, but it was a period when the unemployment rate in Quebec exceeded 13%, and was close to 26% among those under 25. Back then, when the unemployed made up less than 8% of the active population, it was an achievement.

The unemployment rate in Quebec was 4.2% last May. In some areas, it’s less than 3%, which is a real problem. Employers in all sectors are hunting down workers.

This is the main trend. Until 2030, Quebec’s economy will struggle to compensate for retirements in the labor market.

layoffs?

The recession will almost certainly lead to business closures. Even without a decline in economic activity, small and medium businesses surviving on ventilators thanks to the COVID aid will have to shut down. The vast majority of Careers The loss will be temporary.

They say tech companies are freezing hiring. Others are considering downsizing. so what ? This will only relax the hyper-stressed market for specialized jobs a bit.

For the rest, I find it hard to imagine waves of layoffs, even in the context of a slowdown. Employers know how hard it is to hire, and they won’t risk missing out on a potential recovery.

But what if it’s really bad?

So a disaster scenario seems unlikely to me, but you never know. So how do you prepare for this possibility?

In tough times, so it is for individuals and companies: Those who do the best are those who take on the least amount of debt and whose business model resists economic cycles.

How does that translate to you? If you don’t have a lot of debt and your skills are in demand, you won’t have any problems.

If you do not recognize yourself in this description, what should you do?

  • Reduce your debt Postpone major expenses, tighten your budget and, if possible, sell a car. There has never been a better time to do this.
  • If your balance sheet is good, and if you haven’t already, build a safety cushion. Otherwise, apply for a line of credit while you can, to use it only in emergencies.
  • Update your CV
  • If you are not, be more active on professional networking.
  • Think about training courses with which you can improve your position in the labor market. Above all, do not refuse the ones that your employer offers you.

No matter what happens, you have nothing to lose by following these tips. It will increase your worth and ability to handle punches.



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