How to live with It?
During high school, I remember my teenage dabarkadz that had a ‘true love’ for it, basically the root word, Recess.
Most of us like it, not only for the alloted time for merienda but also to sweat out; or, catch some fresh air and sunshine; or, flirt with our “crush”, composing love letters; or, handle some few basketball shots at the gym; or, even play as alternate in the secretly-betted chess blitz game.
Seems our favorite to be relieved from our strict Jesuit mentors, it is an alloted time in-between scheduled class-subjects within the school day for our batch-block to have freetime alternative activities and also for the youthful play, play, play- monitored or not.
During this school-class period, we were encouraged to be physically active and engaged enthusiastically with our peers. (So much for it- as a fave subject, the so-called liberty hour).
In college, for me- that word transformed into something serious as grasped from the interesting business course I was indulged in. As mind-opener I found Recession so interesting but realistically with awful feeling, goosebumps-like.
Are we in a Recession?
Having those assigned readings about the circa 30s geopolitical history’s on the Great Depression- where stock market crashed which sent Wall Street into panic and wiped out millions of investors, it became a reckoning for the dreaded one that ignited a world war infamy.
Over the next several years then, consumer spending and investments dropped, thereby revolving loans turn off into pilings of bad debts. As domino-effect, it caused the steep declines in most industrial outputs as failing companies laid off workers making the weapons industry as alternative while the Army became a succor, the job relief for the fit.
The Philippines (Ph) then, as an American colony, was not affected catastrophically during that ensuing period of the Commonwealth era. Significantly large numbers of Asians were entering the U.S., but Filipinos became one of the largest group of immigrants, privileged and unrestricted, being ‘Brown American’ citizens. And Ph as an emerging wealthy rural economy had been an exporter of Gold, Rice, Coconuts, Corn, Sugarcane, Bananas, Pineapples, Mangoes, and not to be outdone was the world-famous, Manila Rope made from Bicol’s abaca.
As soon as the 1935 Tydings-McDuffie Act was passed, The Philippines enjoyed more its socioeconomic autonomy.
And aptly, on August 6, 2020, the Ph government announced experiencing it (such fearsome word) for the first time in 29 years. But before we start panicking, here’s what we should know about it.
What is it?
By definition, a Recession (in Economics) “is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real Gross Domestic Product (GDP, which is the total value of all goods and services sold in the country during a specific period (of time)); real income; employment; industrial production; and, wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.”
In layman’s term, it is the business cycle contraction when there is a general decline in economic activity. Taken into account, is the weak over-all trade transactions which need stimulants.
They generally occur when there is a widespread drop in spending among us, the consumers. Notably, it’s indicated by significant decline in economic activity for a certain period, categorically lasting at least six consecutive months, where the economy is shrinking (on the average) by 5%, more or less.
As stated, some effects are in the negative growth in the GDP; the widespread joblessness; the decline or loss of income; and, the decrease in industrial production whether in wholesale or retail sales.
What are the causes?
Visibly, it’s the COVID-19 pandemic that is considered as the main driver. We can see countries closing borders in attempts to stop the spread of the virus affecting almost all businesses which could implode International Trade.
Of course, the lock-down preventive quarantines (ECQ, MECQ, GCQ) affected the movements and output of people and therefore the buying, selling, and transporting of goods and services except, as others say, for food sales and some other online transactions.
“Without doubt, the pandemic and its adverse economic impact are testing the economy like never before. But unlike past crises, the Philippines is now in a much stronger position to address the crisis,” Acting Socioeconomic Planning Secretary Karl Chua said (06Aug 2020).
It was written somewhere though that present Ph, as a net-importing country now, might be seeing symptoms of economic decline in anticipation of unsustained local productivity and being aware of its dependence mostly on OFW remittances and foreign debts? The uncontrolled rice imports affecting invariably food security is an eye-opener, too. In addition, there’s the perceived solution of the “Build, Build, Build” program comes into mind which could push productivity.
As a band-aid remedy, massive infra structures’ building avert recession as well as affect deflationary stagnation in times when foreign investments and financial stimuli are lacking.
Any other external or internal political turmoil could not be exonerated from the scenario.
The economic planners now should be pounding their brains on how to mitigate the situation as learned from other nation’s history.
How Recession affects the Economy?
It results in higher unemployment, lower wages and incomes, and lost opportunities, in general. Private capital investments and economic opportunities are most likely to suffer in the current downturn and even including the data changes in the Education of the youth. The “scarring” effects will be long-lived in many areas.
On macroeconomic studies, the first sign was the consecutive negative GDP growth. Simply put, the country is spending more money and resources than it is able to make.
The signs of the times somehow point to the recurring budget deficits, year after year.
Similarly, foreign currency exchange rate fluctuates but this is for your analysis, and there’s one silent gauge on the economy’s health as indicated by the banks’ interest rates (plus high service charges)- why give very low, low interest <rate> to bank savings deposits?
The same- it can be observed even on the microeconomic level. On this scale, it’s noticeable that several businesses experiencing a decline in sales, matumal or assumed losses in revenue.
Most likely, fast to act are availees of bankruptcy proceedings to avert furthering those losses. We can even hear in the news- how the Stock Exchanges’ shares plunging. Many seemed panicky.
Recession and us?
Usually, people at all income levels feel the impact.
It’s on Jobs or Employment: job loss affects the stability of families and individuals; our status, health, and well-being can be drastically smashed by the loss of a job; and, more particularly, one’s self-worth.
With unemployment rates running extremely high during a recession, individuals and families struggle to find income to pay for the bills each month resulting to hunger, love quarrels, divorce and worse- the temptation to commit petty crimes. Others may even succumb to vices, homelessness and poverty; lest, suicidal attempts due to traumatic losses.
As the community quarantines limit the movement of people, consumers of goods and services also lessen. There may not as many consumers buying goods or hiring services, except for some affluents who can afford to buy in bulk ala hoarding essential items at their basements.
Pragmatically, businesses have to limit losses by scaling back production, reallocating resources or even worst, the closing of their operations.
Hence, life savings are on the rescue for those in-the-know, if there’s adequate practice of Personal Financial Planning. Everthing would affect us both as an employee who may already be experiencing a decline or loss of income in- “No work, No pay” policy; and, as a consumer has to deal with a price hike in some goods and services as businesses also attempt to survive.
How to Thrive during a Recession?
“When the downturn hits, they switched to survival mode, making deep cuts and reacting defensively”.
For the majority of the population, surviving a recession comes in 3 basic rules: earning more, saving more, and spending less.
- Earn more
The key to earning more is by creating more income streams even if you got a fulltime job. This can be in the form of a side hustles like, a part-time job, small business, or a mix of both. Accept a teaching job. Tap on having two breadwinners instead of one? Never be complacent with just online referrals, selling/services, and traditional jobs/businesses. You need to find opportunities to earn- like in media platforms of YouTube, WordPress and Kumu. Why not make legit money on FaceBook instead of senseless bickerings? And besides, register with your barangay center to avail of benefits on the Barangay Micro Business Enterprise Law of 2002 (or R.A. 9178, as amended). This is to avoid any tax evasion cases or penalties yet homebiz’ start-up trials have some breathing space, for a limited period. Further, it would be beneficial to consult a Business Professional.
- Save More
Start budgeting (please spend more time on this!); drop excess entertainment costs; avoid fancy restaurants and unnecessary shopping; evaluate those expenses (to repeat) whether necessary or not; re-examine your variable bills; and perhaps, declutter those collections, dispose some preloved items like paintings to raise needed funds. We covered this in an earlier article, Money Communique> Money Saving Trick$.
- Spend Less
Spending less is to save more. It is reactionary to spend less during economic uncertainty and to watch out for tempting online store sales’ offers and the trendy foods available, you might be spending more than you need.
Hopefully, the world economy would not reach a worst-case scenario. But just in case a deep recession may not be curtailed, here’s a Preppy’s advice for an off-grid living.
Reality check: Now is the time to examine one’s lifestyle even if your income grows from multiple streams. Having a reasonably kept amount in your bank will provide a better safety net to deal with unexpected job loss, medical need, or even the necessity to move somewhere, or worse– a loss of a loved one.
Likewise, no one knows when this pandemic will end?!
Everything would pass, be just as mindful of the little luxuries that you do spend for as well with your utilities and grocery spending (repeated~ to emphasize more).
Again, check your lifestyle and never hope too much on those ayudas!
Taking a second look at current expenses and budget, you’ll probably find items that are unnecessary for awhile. True, we should not be fearful of recession as it is an economic activity, a part of a periodic cycle like the vivifying seasons.
On the other hand, the government would encourage massive expenditures! For those who have earlier secured their future and those with stable jobs or regular income subsidies/pensions, they could help in the recessed economy with calculated sprees of spending~ enjoying their status of financial well-being further while money has still the intrinsic power of its purchasing value.
“Reap what you sow”. Like our subject in high school, our personal economic decisions determine the fruits of our sacrifices. Life must go on. Wise spending though is still the dogma for whatever economic class you belong; nevertheless, this the crucial time to practice faith, hope and charity.
Consequently having done your homework well, always strengthen faith with the Supreme Being whom we can rely on. The temperance in all dealings would lessen the anxiety.
“Walking with a friend in the dark is better than walking alone in the light.– Helen Keller
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