You can be just an average dude one day...and recession rich the next. But that means nothing really happened to you...just to everyone else. A recession hit. People are losing their jobs, homes, ability to pay bills, and retirement savings. But not you.
If you’re recession rich, it just means you are relatively “rich” compared to everyone else who was hit harder than you by the recession. It means you’re just going about your business, while everyone else is in panic-mode. But not because you meditate...because you’re more financially immune than others.
Maybe you already paid off your mortgage, or you’re almost done. Maybe because your job is in insurance, which is busy now since the recession. Maybe because you invested in mostly money markets and grocery stores. Maybe you’re retired and don’t have a care in the world. Maybe you're a trust-fund baby, so you really are rich either way.
The Great Recession in the 2000s created a class of recession rich people. Say the neighbor on your left just leased a brand-new car, and the neighbor on your right is sitting on a subprime mortgage and doesn’t know it. Boom, the recession hits. The car has to go back, and that subprime mortgage home is foreclosed. This was reality for many people who just had bad timing.
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Finance: What is Recession?15 Views
finance a la shmoop what is recession well here's one here's another and
another and well here's an economic recession so technically when GDP [Set of teeth appear]
declines for two sequential quarters that is a recession and you can glean
enough from this most excellent chart that in most years GDP grows not
massively but relatively steadily and with compounding the US has grown GDP
from a trickle to a torrent in a recession economic activity declines [Recession definition appears]
maybe a half a percent a percent maybe two percent and you might not think
that's a big deal but we're a nation living on credit that is plastic these [Man using credit card]
things mortgages car loans bunch of other credit II kind of things so a
decline of even 1% when we were expecting growth of two is a delta of 3%
and that change is exacerbated with leverage when people fear for their job
safety they stop buying those extra pairs of earrings at the mall they get [Woman biting her nails]
one less tattoo and they stop making appointments at Botox Depot so all of
the sudden activity in given quote luxury sectors or otherwise unquote just [Person receiving a tattoo]
stops dead and there's a multiplier effect here as well because a wealthy
banker who used to throw 20 parties a year now only throws four so all those [Calendar displaying party days appears]
bartenders and oboe players and ice sculptors yeah they're all out of work
as well and then they buy less beer and that new ice pick the sculptor was gonna
buy yeah well she'll just sharpen her own and make do with it you know until
the GDP grows again after the recession is over in a few years so yeah [Boom/bust cycle appears]
recessions they're dangerous and credit high credit makes them all the more
dangerous so be wary
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