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- The Great Recession left an impression on millennials like me, but I’m still not worried about the next one.
- First, a future recession is unlikely to be as severe as the one we experienced in 2008.
- Also, freelance income and side gigs can add financial stability, and my household is self-employed.
As a millennial, I know the fear the word “recession” will send to your spine when you see it making headlines again. We entered the workforce in the midst of the worst recession in generations after the 2008 housing crash – and we’re still reeling from the 2020 crisis along with everyone else.
The National Bureau of Economic Research (NBER), the independent organization that officially tracks business cycles in the United States, has dated a dozen recessions since it began tracking them in 1948. They have been rare and brief from my lifetime, with the exception of the 19 month-long Great Recession, which turned out to be the most severe economic collapse since the Great Depression.
I’m not surprised to hear the panic in people’s voices when they ask about preparing for a recession. So many people around me learned the definition of “recession” during the 2008 crisis, so our minds imagine the worst when we hear the word.
But I’m not afraid of a recession.
This is not the Great Recession
The main reason I’m not terrified of whatever the economy will do next is that recessions aren’t always the Great Recession.
Inflation and recessions are inevitable fluctuations in a capital driven business cycle. The economy grows until it reaches a tipping point where people can no longer follow prices or businesses can no longer follow speculation, and it sinks into recession, which the NBER loosely defines as ” a significant drop in economic activity that is spread across the economy and that lasts for more than a few months.”
Recession does not always mean widespread and lasting job loss and unemployment. It usually does not decimate all sectors of the economy at once. It doesn’t always depress the career prospects of one generation and the retirement plans of another.
The experts who predict the next recession are now mainly talking about one thing: investments. They watch trends in the stock market (and, unusually, the bond market too) and wring their hands on corporate earnings and investor gains in the near future.
For most of us, these market fluctuations – and perhaps even large and prolonged declines – do not affect our daily lives. We’re much better off skipping the daily news about the state of the economy, as it’s often sensational and irrelevant if your income and net worth aren’t heavily dependent on stock values.
However, a recession can impact the rest of us in several important ways: falling stock values typically impact your retirement savings, and lower value at large companies can lead to layoffs that increase unemployment.
For these reasons, I am happy to be independent.
We have found economic stability in self-employment
I’m a big advocate for self-employment as a freelancer or business operator, whether you work for yourself full-time or alongside another profession. Self-employment gives you an incredible amount of financial self-determination, and a potential recession lays that truth bare.
We are not afraid of the next recession in my house because my partner and I are both freelancers – he is a freelance graphic designer and I run a financial education startup. We are not mired in the current fears of recession because we are not subject to the whims of corporate capitalists.
Our professional status can make some people nervous, as instability is a pervasive myth that scares many people away from self-employment. But that’s just not the reality. Just over half – 55% – of working Americans believed there was no chance they would lose their jobs in the next 12 months in the latest Gallup poll. 15% believed job loss was likely.
When you’re on one side of a balance sheet, you’re subject to the decisions a company makes to tip the balance.
Because my partner and I are both service business owners, our income is diversified across multiple businesses and industries. No company’s decision to “restructure” to preserve profits in a recession has the potential to destroy our livelihoods. Self-employment keeps us agile; we can easily adjust and recover if a client withdraws their business. I experienced this during the 2020 recession, when a third of media was laid off while my freelance income doubled.
Being self-employed also means that I am fully responsible for my own health insurance and pension plan, a fact that many people consider a disadvantage, but which I consider an advantage.
I can choose where my health insurance dollars go, so I receive insurance and care through a member-owned nonprofit cooperative instead of a public conglomerate. I’m not dependent on an employer to provide this, so I can make decisions about how I work without having to get medical coverage. And if a client terminates my contract because of a recession, my health insurance is not affected.
The same is true for my retirement plan. Additionally, starting your own business – even a freelance or service-based business – is an opportunity to create an asset that you can one day sell. It’s a much more interesting and joyful investment for me than anything the stock market has to offer. And it provides some protection against my retirement account dropping during a recession.
Take a beat the next time you read a headline about an impending recession. Note where you react out of fear and think about the real impact of changing circumstances on your life. Make your plan and your money will move from that conscious place.
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