I’ve just finished reading “The Recession-Proof Business” by Victor Cheng. That book deserves a more in-depth review in the near future, but already I wanted to share two pieces with you. Why? Because it offers perspective and hope to people and businesses in a recession. News are about getting clicks, and that means they focus on the negative, on what is being lost. So it’s always doom and gloom and tomorrow the econony will crash and burn and we’ll literally be eaten by zombies alive while not even having finished our last margarita and also what’s the Fed doing anyway?
I stumbled over this gem that James Ledbetter tweeted: Small businesses “create” majority of jobs. As in: when Reuters fires me, I will become a small business. Job created! Ledbetter rolls his eyes at the government and analysts who tend to get excited about small businesses during economic downturns. For example, this headline from 2020 as found on reason.com: Americans Are Starting a Staggering Number of Businesses During the COVID-19 Pandemic
Today I read a fun 2010 article from the Harvard Business Review. Instead of just the usual legends (“Remember how Fedex was started in a recession? That’s how you do it!”), they did a proper study looking at companies and how they were approaching the 1980, 1990, and 2001 recessions—and which approach worked best. The article is worth the time to read yourself—I’ll give you a mini summary so you can decide.
Andy Serwer and Dylan Croll from Yahoo Finance had an interesting “morning brief” today. Looking at the last few recessions they observed two things that maybe indicate how severe a recession will be and how long it takes to recover from it: The surprise factor: The economy plunges when the downturn comes as a surprise. Exapmles: 2008, 2020. In contrast, the recession is much more mild when everyone thinks it’s coming.
Alex Sherman at CNBC had a good read today on media companies preparing for a recession, why they’ve been hit hard in the last few, and why “this time” it might be better. Their scenario really shows how recessions can be terrible for some businesses and I think it also shows you how to prep a bit. Let me start with an interesting quote that’s buried in tha lower third, because I don’t want you to skip past it:
Interesting read about Australia and its per capita GDP recessions today! In 2020, when the pandemic hit and governments told everyone to stay at home, the economy of many countries crashed, and Australia’s was no exception. For the first time in almost 29 years (isn’t that insane?) the Australian economy was in a technical recession. (Yes, 2001, 2008, they avoided those recessions.). But does that mean that things were always rosy?
Three weeks ago we were looking at US retail inventories—the question was if the inventory levels building up were because demand was dropping—the starting point of a recession. The reasons were likely different. Today I read another article about retail inventories, and this time the story is that huge inventory levels might lead to inflation reversing itself again. What that’s about? How can high inventory levels defeat inflation? Wood’s argument goes like this:
“The economy is going to collapse.” Well, a Good Morning to you, too, dear reader! Always nice to read something like that, right? And who said it? That was Michael Novogratz, a “veteran investor and bitcoin bull”, talking with MarketWatch. He is convinced a “fast recession” is coming. Well, everyone has an opinion so someone is bound to have said basically anything. Here, it’s much more interesting to look at why Novogratz thinks that a recession is coming.
What business to start during a recession? Countless articles on the internet give you advice on that, and they usually tell you to focus on the essentials: food, clothing, budget chocolate. (Everyone neets a sweetener in tough times, right?) So it was interesting to stumble over an article today which discussed how the funeral industry of all things was hit in the 2008 recession. Seriously? Yes, it did. And we can learn from it.
As a recession might be looming, there are lots of ideas of what a recession in 2022 or 2023 might entail. Here is one that stuck out today: A recessions might help reverse the move to work from home. (WFH) Now, who said that? Stephen Ross, a billionaire and, as Mike Florio on NBC Sports noted, a developer of (also) offices. So that’s someone with a very strong interest in making these kinds of predictions.