What is a recession?

Australia is about to enter a recession, having gone a world-record 29 years without one, according to 87% of economists in the latest Finder survey. With downloads of redundancy letters increased by 185% (taken in May 2020), Part-time and flexible employment agreements increased by 243% and the recent CCIQ Pulse Survey showing 2 out of 3 businesses (65%) indicating that business conditions during the June quarter had deteriorated; there is no hiding hard times ahead. 

The business insider Australia explains that "The positive spin is that two-thirds of economists also expect the recession to be short-lived, with Australia’s economy to begin recovering by the end of the year". So what is a recession and what could it mean for your business?

A recession is generally when a country's economy declines. Technically, economists couldn't label it a recession if the Australian stock market has one bad day – you generally need two successive quarters where Australia's gross domestic product (GDP) has fallen. 

A recession will usually lead an average family house to stop spending and small business becomes directly affected. Coffee shops may have to lay off additional staff because people choose to make coffee at home. Gyms may have to cut down on staff as people quit their memberships due to tightening budgets. 

Property owners may not put their homes up for sale fearing a smaller market of buyers and as a result, house prices could ease off. First time home buyers could be less likely to commit to a big-ticket purchase in case they need to lean on their savings during unemployment.

But should we be afraid? The Business Insider says that "Of those [economists] surveyed by Finder, two-thirds predicted a recession would be over by the end of the year; the assumption being that containment by the middle of the year will be followed by a relatively swift recovery.

What haven't we had a recession in decades?