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Recession is not always bad: three positive aspects of the economic crisis

When the recession begins, naturally everyone worries about the negative aspects. And it is true that a recession creates many difficulties for people. Writes about it Money Talks News.

Photo: Shutterstock

There are some things that actually improve during a recession.

1. Cheap stocks

A recession is a time to look for great deals. When the stock market falls, you may be tempted to sell and give up what looks like a sinking ship. However, instead of fixing losses, a downturn may be a time to look for good deals and buy more stocks as stocks get cheaper.

Money Talks News founder Stacy Johnson recently wrote about the benefits of buying when stock prices fall: “During the Great Recession, which began in 2007, the market fell 50%, bottomed March 5, 2009, when the Dow Jones Industrial Average closed at level 6 594 points (now this level is approximately 20). If someone was lucky to buy something near this bottom, then you can make money, even after the recent market crash. ”

Since Stacy wrote these words, the market has fallen a bit more, but the basic idea remains the same: buying at a low market may pay off in the future.

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Of course, you won’t be able to accurately predict when the market bottom will come, but you can still get a good deal on stocks if you buy them when they are cheaper. Stacy recommends considering blue chip stocks with dividends, as well as taking into account index funds. Many of these stocks are on sale now and may become cheaper in the coming months.

Later, when the market recovers, your hunt for discounts may pay off. Of course, there are no guarantees, but the use of recession in the past has always paid off in the long run. Most likely, this will be the case this time too.

2. Lower mortality

Interestingly, mortality rates may fall during a recession. A recent study showed that between 2005 and 2010, during the period that included the Great Recession, the mortality rate actually declined as unemployment in urban areas increased.

One of the biggest contributions to reducing mortality was the reduction in mortality from cardiovascular disease. Traffic accidents were another category in which mortality declined.

Although there is no direct link between recession and lower mortality, one of the authors of the study shared the theory of why mortality can decline during economic hardships.

“When the economy is worse, people spend less money. They are less likely to go out and eat unhealthy food, smoke less or drink less. They can travel less. Therefore, an increase in unemployment is associated with a decrease in mortality, ”he writes.

Perhaps we need more information to find out the causes of lower mortality during the recession, but reducing mortality can be one of the positive aspects of the situation.

3. People overestimate what matters to them

Many people reevaluate their lives in times of stress and think about their budget priorities.

In early 2009, during the Great Recession, the savings rate rose to 6,9% - the highest level since 1993, according to a report from that time. It also represents a jump in the near-zero savings rate in early 2008.

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By January 2020, the savings rate was 7,9%, according to the Bureau of Economic Analysis. A sharp increase from a zero savings rate to almost 8% after a dozen years shows that, since people are more worried about economic conditions, they are shifting their priorities towards saving.

In addition, they may also think of other life options during the recession. Many people rethink what it means to have a good life in difficult economic times.

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