Welcome to Fintastic Females, where we embark on a quest to discover the mythical island of freedom together. I’m Kalyani, joined by Rupali, and as your friendly neighborhood finance experts, we’re here to share our insights into the world of money and energetics.Today, we’re delving into the topic of recession, which has been causing a lot of chatter and fear lately. While we’ve touched upon it in previous episodes, we wanted to dedicate an entire episode to help our listeners gain a deeper understanding. So, what exactly is a recession? Simply put, it’s an economic slowdown. Rupali and I have been feeling a bit slowed down ourselves, so it’s a relatable concept. Just as we sometimes need to take a pause or experience a dip in our energy levels, the economy also requires periods of rest. If economic growth were to be a constant upward trajectory, it would be unnatural and unsustainable. So, recessions, downturns, and slowdowns are necessary, unavoidable, and healthy for the economy.

We’ve previously discussed the effects and ways to combat recession under our episodes on inflation. Inflation leads to increased prices, which puts pressure on consumer spending. As consumer demand falls, suppliers reduce production. This, in turn, leads to employees seeking higher wages from businesses that are struggling to sell their products. The cycle perpetuates and eventually evolves into a recession. From an economic standpoint, inflation is often seen as a precursor to recession, and we find ourselves somewhere in between these two phenomena currently. The Federal Reserve in the US has been increasing interest rates aggressively to curb inflation and prevent long-term inflationary pressures known as stagflation.

However, this has resulted in an economic slowdown and various indicators, such as employment rates, reflect this deceleration. We might be approaching the cusp where inflation peaks and starts subsiding, while the economy enters a period of slowdown or even a potential recession if interest rates continue to rise aggressively.When it comes to defining a recession, there’s actually no consensus in the media. Opinions vary, and even the formal definition has seen changes. Previously, a recession was defined as two quarters of negative GDP growth, but it has now been expanded to three quarters.

The Wikipedia page on recessions had to be locked due to continuous changes in the definition. It’s quite amusing how this has sparked debates and alterations. However, it’s essential to understand that mindset plays a significant role in how we perceive recessions. Even during times of economic growth, businesses shut down, people lose their jobs. It’s not all doom and gloom. Our individual experiences and personal circumstances contribute to our outlook. As finance experts, we aim to provide a holistic perspective and remind everyone that opportunities can arise even in challenging times.

As an investor or individual, there are steps you can take during a recession. Firstly, maintain an emergency cash flow fund, typically three to six months’ worth of expenses. Assess your spending habits and consider where you can make adjustments without panic, but with thoughtful consideration. Finally, take advantage of lower asset prices. Market downturns present opportunities, and history has shown that recoveries happen. However, engaging in such investment strategies requires a secure financial position and spare cash or emergency funds.

As we wrap up this episode of Fintastic Females, we want to leave you with a positive and empowering message. While recessions can be challenging, they also present opportunities for growth, innovation, and personal financial resilience. It’s important to approach these times with a mindset of adaptability, creativity, and resourcefulness. Remember that your financial well-being is in your hands, and by staying informed, making wise decisions, and being prepared, you can navigate through any economic downturn with confidence. Together, let’s embrace the adventure of financial freedom and continue on this journey of learning and empowerment. Thank you for joining us, and we look forward to sharing more valuable insights and experiences with you in our future episodes. Stay Fintastic!