Although the idea of a recession brings to mind layoffs, plummeting stock prices, falling housing prices, and a generally sluggish economy, there are some areas where consumers can take advantage of a recession. A recession generally yields bargains in the form of under-priced stocks, cheaper real estate, and bargain high dollar consumer items such as cars, appliances, and electronics. In addition a recession frequently brings government economic stimulus programs or tax relief packages to hasten the recovery. Making the most of the economic recovery package can also help a smart consumer take advantage of the recession.
A recession typically causes a plunge in the stock prices. As investors lose confidence in individual companies and the economy in general, some investors look to sell off stocks and move monies into safer investments such as gold and bonds. A savvy investor can take advantage of this with careful research. Investing in undervalued stocks can be a prudent way to take advantage of the recession.
Some stocks may be facing long-term recoveries while other are simply casualties of a general lack of investor confidence. With careful analysis an investor can find stocks with excellent five and ten year outlooks that will undoubtedly quickly recover as the recession wanes. Stocks issued by companies in sectors that will have the most to gain from the recovery, such as construction or consumer goods, may be excellent possibilities for taking advantage of the recession.
In addition to taking advantage of depressed stock prices many recessions include a sharp drop in home and real estate prices. A recession also frequently causes a drop in mortgage rates and/or interest rates and a rise in foreclosures, which can make buying real estate that much more attractive. With a sharp recession and falling home prices, such as those occurring in 2008/2009, banks are forced to foreclose on many homes and then sell them at depressed prices. Purchasing a foreclosed home or just taking advantage of the generally lower real estate prices can be an excellent investment opportunity in a recession.
As a recession deepens and some consumers are forced to cut spending, businesses frequently suffer inventory gluts. These businesses are forced to slash prices and offer customer incentives to move merchandise. Smart consumers can often take advantage of a recession by buying such large ticket items as cars, appliances, and electronics at bargain prices.
Companies trying to prop up their balance sheets and maintain stock prices are frequently desperate to report positive sales numbers and consumers can take advantage of these recession conditions to replace older cars. New appliances, home improvements, or electronics upgrades can also be good investment during a recession as they may increase the value of a home or have great resale value in the future.
During recessions governments are frequently forced to pass stimulus packages or tax relief measures in an attempt to stimulate the economy. These stimulus measures can help taxpayers take advantage of the recession. Programs, such as the 2009 Cash for Clunkers or the 2008 and 2009 First-time Home Buyer Tax Credits, provided substantial tax relief for some taxpayers. Taking advantage of these and other tax cutting measures can provide extra money to take advantage of some of the other recession bargains or just allow a consumer to pay down debt and save money on future interest payments.
Although a recession often means widespread economic troubles, the savvy investor and smart consumer can take advantage of a recession. Carefully planned investments, smart purchases, and shrewd tax strategies can allow consumers to realize financial advantages even in the midst of a general economic downturn. The right decisions and strategies can turn recession negatives into positive financial gains for investors and consumers willing to take advantage of the economic opportunities.
