Recession?

Generally we tend to slowly slide int recessions. They are always declared after the fact. Usually it’s after two consecutive GDP drops two quarters in a row. You night not even notice you are in one. Of course, if your income is dependent on a sector heavily influenced by the downturn, you’ll notice. For most people things just keep getting slightly more crappy.

Then there are instances when recessions happen due to a major shock to the system. One of the biggest causes of those are fluctuations in the availability of oil. Our whole economy runs on oil. It’s not just motor fuel; it’s everything from plastics to agriculture.

Something like a shooting war against Iran would definitely put us in a position to suffer one of those quickie recessions. A significant part of the worlds oil could suddenly be cut off from the sea lanes. Not only that, Saudi Arabia’s production and distribution facilities would be prime Iranian targets.

How would you do in a recession?

Personally, I’ve been in one for ten years. It’s been that long since I’ve gotten a raise from my New Hampshire pension plan. Actually, they eliminated a thousand dollar a year bonus. Even a fairly low inflation rate adds up after a decade. Lately it’s really hit how much prices have gone up. Of course, I’ve been making adjustments.

Sometimes in a recession I actually make out better than during boom times. Recessions depress prices. While my pension isn’t huge, it’s steady. Being able heat with wood reduces the impact of a rise in heating oil. Sometimes I can pick up good deals on things because people are desperate to sell anything for cash.

Everyone’s situation is different. Odds are good we’ll be affected in ways we cannot predict. One thing we do know. Our basic needs don’t change. Focus on being about to take care of them and you’ll be fine.

-Sixbears