How to prepare for the recession

At the risk of sounding jovial, I find the tone of business news overly heavy. The big question of the hour: are we headed for a recession? Bets are off: 35%, 50%, 75%?

The thing about the recession is that we’ll speculate about it for months and won’t have confirmation until it’s behind us. Technically, we need at least two quarters of contraction in economic activity. In this respect, the data always tells of the past.

On a daily basis, we don’t care about fluctuations in GDP. What matters is the impact: will we lose our jobs? That’s the fear that talk of a recession inspires.

Can this happen?

How do you prepare for this eventuality?

Back to the Future ?

Are central banks setting the stage for a recession by raising interest rates too quickly to curb rising prices? That’s the problem.

It brings back the 1980s specter.

I’m not referring to Rick Ashley, I’m referring to the then truly persistent inflation, which peaked at 12.5% ​​earlier this decade, and the response of the Bank of Canada, which raised the interest rate ceiling (mortgage rates achieved) 21% a year 1981). It blew the economy away Despite vague resemblances to the current situation, it has nothing to do with what we are going through.

Interest rates, while rising rapidly, remain historically low. It’s true that household debt was lower when the album was released thriller by Michael Jackson, but it was the time when unemployment in Quebec was over 13% and nearly 26% for the under-25s. At a time when the unemployed made up less than 8% of the labor force, that was a feat.

The unemployment rate in Quebec was 4.2% last May. In some regions it is below 3%, which is a real problem. Employers in all industries are snapping up workers.

And that’s the underlying trend. By 2030, Quebec’s economy will struggle to compensate for retirements in the labor market.

Redundancies?

A recession would certainly cause businesses to close. Even without a drop in economic activity, SMEs living on artificial ventilators thanks to the “COVID” help will have to go out of business. The vast majority of jobs lost will be temporary.

Tech companies are freezing hiring, they say. Others are considering downsizing. So what ? It will ease the hyper-stretched market for specialized jobs just a little bit.

Incidentally, I find it difficult to imagine waves of layoffs, even in the context of a slowdown. Employers know how tedious hiring is, they don’t take the risk of missing out on a possible recovery.

But what if it was really bad?

The catastrophe scenario therefore seems unlikely to me, but you never know. So how do you prepare for this eventuality?

In difficult times, it is true for individuals as well as for companies: those who have the least debt and whose business model is resistant to the economic cycle get through best.

How would that translate to you? If you’re not in too much debt and your skills are in demand, you shouldn’t have any problems.

If you don’t recognize yourself in this description, what should you do?

  • Reduce your debt; Put off major expenses, tighten your budget, and sell a car if you can. There’s never been a better time to do it.
  • If your balance sheet is healthy, and if you haven’t already, build a safety net. Otherwise, apply for a line of credit while you can that will only be used for emergencies.
  • Update your resume
  • If not, be more active in professional networks.
  • Think of the training courses that could help you position yourself better on the job market. Above all, do not turn down offers from your employer.

No matter what, you don’t lose anything by following these tips. They increase your value and clout.

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