- How long does a recession last?
- Is this recession different?
- How long should you expect the coming recession to last?
- Digital tools for use in a stressful recession timeline
Q: How long does a recession last? What can my business do to get through a recession?
A: Historically, recessions last about ten months. That said, we can’t determine exactly how long a future recession will last until it’s over. To get through a recession, your business should save money, not take on extraneous debt, and identify a niche.
Some economists claim that a recession is coming, and others claim that we’re already in the middle of one.
Although we can’t determine with perfect accuracy the specifics of future recessions, past recessions give us key insights into the length and severity we can expect when the economy takes a dive. This helps us create an accurate recession timeline.
From 2007 through 2009, the United States experienced one of the worst downturns since World War II.
The collapse was triggered by shady financial instruments and obscene government bailouts across several sectors, and in the years leading up to this recession, several indicators were pointing to a coming crash.
This period of economic struggle was called The Great Recession, an adage to the Great Depression of the 1920s.
While we aren’t currently seeing the same indicators that pointed to the 2008 collapse, different indicators like lower familial wealth and diminished homeownership are causing rising fear throughout the country.
Because of the public’s widespread fear of an economic downturn, questions like “how long does a recession last?” are on everyone’s minds.
In this article, we’ll be exploring the length of an average recession, how this recession might be a little different than previous recessions, and what to expect from the coming recession.
Next, we’ll look into digital tools that you can use during a stressful recession.
Whether you’re a business owner trying to determine what to expect during a recession or a fledgling entrepreneur looking to get started, this article should give you plenty of valuable pointers.
Asking questions like “how long does a recession last in the stock market?”
Don’t worry — you’re in the right place!
- How long does a recession last?
- Is this recession different?
- How long should you expect the coming recession to last?
- Digital tools for use in a stressful recession timeline
How long does a recession last?
Questions like “how long does a recession last in US” are perfectly valid.
But before we dive into the standard recession length – let’s take a closer look at what a recession is.
Historically, most countries have defined a recession as “a period of economic decline that lasts at least two successive quarters”.
The United States, however, uses a committee called the National Bureau of Economic Research, or NBER, to determine whether or not we’re in a recession.
This committee is a nonprofit organization that uses several factors outside of a 2-quarters-long reduction in the economy, like employment numbers, economic output, and consumer demand. Let’s take a closer look at these key factors below:
- Employment numbers
- Most recessions are easily recognizable due to the sheer volume of unemployed workers in the labor market. The recent economic declines have been accompanied by surprisingly low unemployment rates.
- Economic output
- Recessions are typically distinguished by two consecutive quarters of decline. In the past, recessions have reduced GDP by 2-5%.
- Consumer demand
- As expected, times of financial hardship cause consumers to spend less. When the cost of living is increasing, wages are stagnating, — and fear is spreading across the market. Consumers are going to buy precisely what they need, for the cheapest prices possible.
Unfortunately, even with these clearly defined factors that are associated with recessions, the NBER makes the final call.
Outside the rather vague phrase “a significant decline in economic activity that is spread across the economy and that lasts more than a few months,” the exact definition of a recession is essentially whatever the NBER decides it is.
As you can imagine, this makes periods of economic downturn fairly confusing for the average American.
Questions like “how long does a recession last usually” just aren’t as easy to answer when the metrics by which we gauge a recession aren’t clear. Just look at July of 2022:
The U.S. experienced two consecutive quarters of decline, the market was getting hammered, sentiments were negative, and fear was high. On the other hand, employment slightly declined during this same period.
Situations like these make it difficult to determine what exactly our next recession will look like.
Thankfully, we have ample historical information to use to help us identify what the future recession length might look like.
Recession Length
With data that has been collected for well over 100 years, it might be easy to answer a question such as “how long does a recession last 2022?”.
Fortunately, data from as far back as 1854 gives us plenty of insights. Since 1854, the average length of a recession has been approximately 17 months.
But if you only look back to World War II, the average recession length is only 10 months. This indicates that recessions in modern and more recent times are remedied faster than they were in the past.
However, the 2008 recession blew previous expectations out of the water when it lasted a whopping 18 months.
All of this data gives us a general idea of the standard recession timeline but also points back to the fact that recessions can’t be predicted solely by looking at average length.
With all the economic metrics used to determine whether or not we’re in a recession, countless variables can impact said the recession and keep it going longer than historical precedent would otherwise indicate.
Light at the end of the tunnel
It’s worth noting that most recessions result in periods of economic boom.
After a recession, the economy typically ramps up significantly compared to pre-recession levels.
For business owners, this means that if you can weather the storm, you’ll usually be rewarded for your patience and perseverance when the market turns around.
Is this recession different?
Our current recession has several interesting and unique features that can lend difficulty to questions that resemble “how long does a recession last minimum”.
Below, we’ll cover some ways our current recession differs from past recessions.
- COVID’s impact
- The Great Resignation
- New inflation
COVID’s impact
First, the COVID rebound continues to affect the economy.
While COVID’s impact isn’t discussed as often as it once was, it significantly impacted supply chains and slowed down the production of consumer goods.
The pandemic brought a rapid drop-off in consumer spending power. This was the shortest ‘recession’ we’ve ever experienced — lasting only two months before the economy came booming back.
This short-lived period of decline, followed by extraordinary growth, has led to a pretty serious mismatch between supply and demand.
The Great Resignation
In the wake of the pandemic, quit rates reached levels that hadn’t been seen since 1973. The reason for this is that many people are refusing to work for extremely low wages.
Further, a majority of these workers are seeing higher wages as they change occupations. Many of these individuals are choosing instead to start businesses or become freelancers.
This has further complicated the mismatch between supply and demand, as some people are making more than before while the corporations that relied on cheap labor have hit serious roadblocks.
To make matters more confusing:
As more workers find better-paying jobs and create businesses of their own, the unemployment numbers remain stagnant. This leads to confusing metrics during a period that would otherwise be deemed a recession.
New inflation
Finally, there is the phenomenon of a somewhat new kind of inflation.
Much of the current inflation has less to do with fundamental economics and more to do with megacorporations collectively raising prices.
The motivation behind these price hikes isn’t simply to boost profits. Corporations share a complicated relationship. If one big corporation raises prices, other big corporations are incentivized to do the same to match the market price of goods.
This leads to a continued pattern of companies raising prices over one another — to the detriment of the consumer.
For example, meat prices started to skyrocket during the pandemic, becoming 21% higher on average across all markets.
Four companies control approximately 85% of the American pork, chicken, and beef market. Since the beginning of the pandemic, these four companies have seen a 500% increase in net income.
This ‘new’ kind of inflation is effectively price gouging.
But amidst an economic downturn, these companies can point the blame at inflation and rising supply costs to account for these obscene numbers.
Because this isn’t a direct result of supply and demand, it might not be solved as easily by supply and demand adjustments.
But is this recession really different?
Regardless of the differences we’re seeing in this recession, no two recessions are exactly alike anyways.
So yes, this recession will be different.
But thankfully, businesses can prepare for any kind of economic downturn.
Read more: The Complete Guide to Making Your Business Recession Proof
While several indicators are pointing to some serious economic fallout, new business owners and future business owners need to know how to prepare regardless of recession length.
What to expect from the coming recession?
With all of these factors to consider, the coming recession might last longer than prior recessions due to the complex and unusual economic circumstances surrounding it.
Taking this into account, the coming recession also holds many new opportunities that prior recessions didn’t.
Wondering “how long does a recession last” is only the beginning. If you prepare correctly, you can set your business up for continued success despite the widespread economic decline.
From adjusting prices to tweaking your target audience, there are several ways that savvy entrepreneurs can use these times to position themselves.
Below, let’s take a look at what the average small business can expect during this recession and go over some tips to help you thrive – regardless of recession length.
‘New inflation’ and supply chains
While modern supply chains have been suffering, the price increases that we’ve seen are a result of much more than simple bottlenecks.
This gives smaller businesses a chance to present themselves as an affordable option. In times of reduced spending power, this is a fantastic way to win new markets and quickly grow a business.
If you can offer a product a few cents cheaper than your competitors, consumers will flock to your offerings. Thanks to alleged corporate price gouging, entrepreneurs can offer a majority of their products or services for a better price — often even if they’re sourcing locally.
E-commerce boom
Some industry reports are claiming that ecommerce is going to account for nearly a quarter of global retail sales by the end of the year.
Because of the widespread acceptance of online business and reliance on online shopping, businesses can start with far less overhead and quickly connect with willing customers.
Through the use of a Virtual Office, business owners can easily use this affordability to take advantage of the increase in e-commerce and carve out their own piece of the digital market.
Read more: How to Start a Virtual Company
Entrepreneurs are recession proof
At the end of the day, many entrepreneurs are going to thrive regardless of the recession length.
Generally, low prices, widespread economic fear, increased trust in e-commerce and other digital businesses, and a shaky market provide the perfect opportunity for hungry entrepreneurs.
And remember:
The growth that occurs when a recession ends gives business owners something tangible to work toward. If they capitalize on this opportunity, the economic boom on the other side can slingshot them towards massive success.
The key to starting a business during a recession is finding a niche for your business to fill.
This might be easier said than done, but we’ve taken a closer look at some business ideas that you might consider during a recession:
- Groceries
- Food prices continue to rise, and if you have access to local sources of these products, you may be able to beat out the ridiculously priced big-box stores.
- Property management
- Low home ownership has historically been a telling sign of a recession. As a property manager, you’ll need some capital to get started. But tenants provide continued income, and people are always going to need somewhere to live — even after a recession ends.
- Online publishing
- Social media usage has increased exponentially over the past few years. When going out becomes too expensive, the average American will retreat further into their smartphone. Publishing smaller authors or content creators online for a reasonable price provides a great way to secure market share while helping artists find work as well.
- This business model will only work if you’re able to properly market the content you’re publishing, but with the precise nature of online marketing initiatives, you can easily carve out a niche.
- Pet care
- Pet owners know no limits when it comes to pampering their animals. During times of economic hardship, they will go without so that they can continue providing a certain lifestyle for their animal companions.
- Small business owners can leverage connections within their community to create brands that appeal to pet owners and create an easy way to improve the customer/company relationship.
- Cleaning services
- This could be a commercial or residential service. The pandemic showed the world how seriously cleanliness should be taken. But even without the pandemic, businesses and homeowners alike want a clean home.
- Starting this kind of business is incredibly cost-effective. Outside of the LLC registration fees and the raw material costs, you don’t have to pay much else to get started.
- Both residential and commercial cleaning services can be easily marketed through word of mouth. Just visit as many offices or homes as possible, offer a competitive price, and do a good enough job that your clients feel compelled to tell their friends.
- Adult industries
- Like it or not, the adult industry isn’t going away. This kind of business isn’t for everyone, but with continued social acceptance it doesn’t look like the worst recession the world has ever seen could stop the adult industry.
- Shipping and logistics
- Freight tonnage is expected to increase to over 20 billion tons by 2030. Coupled with a shortage of viable drivers and constant industry layoffs, starting a small business with competitive rates and fair salaries is an excellent way to create jobs and set your business up for future success.
- Freight tonnage is expected to increase to over 20 billion tons by 2030. Coupled with a shortage of viable drivers and constant industry layoffs, starting a small business with competitive rates and fair salaries is an excellent way to create jobs and set your business up for future success.
Hopefully, you’ve found some answers to the question, “how long does a recession last.”
But better yet:
Maybe you’ve found some actionable methods to get through any recession successfully.
Keep reading for some tips about digital tools that you can use during a recession!
Digital tools for use in a stressful recession timeline
Most recessions last somewhere between 10 and 17 months. That said, the current recession might last longer because of the complex factors contributing to it.
Small businesses can use the modern economic landscape to connect with consumers and build a successful business, even in a recession.
With the rise in digital businesses and constant technological advancements, modern entrepreneurs have more tools available to them than ever before.
Consider one of Alliance’s Virtual Offices.
These Virtual Offices provide a cost-effective way to create a legitimate, professional, and flexible business. Not only does Alliance have offices available in every state, but there are several locations available in most major cities as well.
The modern market values flexibility over everything. Alliance gives you a way to easily expand to new locations, using high-quality marketing metrics to perfectly identify your target audience, and using your Virtual Office to corner your new market.
Outside of your new Virtual Office, Alliance provides several other tools that you can use to position your business for long-term success. Check out our website to see which services you can use for your business!
Further reading
- The Complete Guide to Making Your Business Recession Proof
- Freight Transportation Revenue to grow 53.65% by 2030; New Insights into Future-Proofing the Trucking Industry
- Small Business Cost Savings: A Simple Way to Grow Your Income
- How to Start a Virtual Company
Alliance Virtual Offices provides several tools for new business owners, fledgling entrepreneurs, and long-term owners alike.
Determining how to answer “how long does a recession last” is no easy task.
Hopefully, you’ve found some answers that will help your business use the recession to carve out a foothold in this market.
With the tools you have at your disposal, and the years of hard data about previous recessions, you can create a business that can get through anything.
Careful planning, cutting unnecessary costs, and targeted, effective marketing are the best ways to take advantage of the decline in the market.
It doesn’t matter if you’re looking for more actionable tips on how to understand the recession timeline or you’re hoping to find profitable business ideas:
Alliance Virtual Offices has you covered.
Are we headed for a recession?
A recession is very likely soon.
