9 Reasons Recession Can Be Good for Economy, ETFs | ETF Trends

A decent recession is a necessary evil that helps rid the market of inefficiencies, unfortunately along with jobs and businesses, but it helps refresh the economy and exchange traded funds (ETFs).

There are two sides to every story, of course. Ask someone who was just laid off or even lost their home – chances are, they might not agree with the positive aspects of a recession.

But according to Rick Newman for US News & World Report, there are some auspicious trends caught between the disheartening headlines:

  • There is an increase in savings that translates to lower debt and more money available for prudent investments for the long term. The profligate spending of yesteryear has left us consumers with little leg room in rough times.
  • Frugal spending has compelled retailers to offer the best product at the best possible value. Tougher lending practices by banks have also forced consumers to make the right choices in spending.
  • Now, there are bargains to be had nearly everywhere. It just may be the time to buy necessary appliances and tools that one may need in the future at dirt-cheap prices.
  • Banks have learned their lesson and there are better lending standards in place. At least for the foreseeable future, there may not be a reckless lending bonanza.
  • By showing off less of one’s wealth through the accoutrement of extravagance, the frugal people who stayed within their means are the ones able to get loans now.
  • Consumers have also toughened up in the dismal times, which sparks ingenuity and leads to new ways to solve problems.
  • Traffic has been eased as travelers cut back from airports and on the roads. Less driving has also let consumers once again glimpse that all-elusive $1 a gallon gas price.
  • Some of the recently unemployed have gone into business for themselves, which may lead to  more innovation down the line. As big employers outsource, the entrepreneurs who create the creative startups to fill consumer niches may one day grow to thriving companies.
  • The end is near, at least as far as the recession is concerned. It is said that an economy improves little by little without the people ever realizing it. This won’t last forever.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.