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A spike in prices has been evident globally towards the end of 2022, and economists are concerned about a potential recession in early 2023, according to a story by CNBC.
A recession means a downturn in the economy, determined by the decline of its gross domestic product (GDP) within two consecutive quarters. Some factors that constitute it are low employment, low-interest rates, low demand, and a decrease in consumer spending. Because people make less money, they are spending less and not buying goods as much as they can.
Industry expert and successful entrepreneur Noelle Randall shares her insights on some factors that will play a key role in the 2023 recession and what people can do to overcome and profit from it.
What’s coming in the economy in 2023
Noelle explains that the 2023 recession will primarily be caused by two factors – inflation and increasing federal reserve interest rates.
Inflation is when the prices of goods and services are higher than before and people pay more than they usually would. As inflation rises, every dollar or unit of currency buys fewer
goods and services. Inflation erodes the purchasing power of money. According to Noelle, inflation is a natural occurrence in the economy as long as it’s within the range of 2% per annum.
“Inflation is not a bad thing. The problem with inflation is that it is going way above the average 2% and people’s income usually only rises by 2% to 3% per year. It should match what inflation does. So with the recent inflation of 7%, people’s income couldn’t just keep up,” she expounds.
In addition, the Federal Reserve lends money to banks at an interest rate, which leads to charging them higher payments. This entails banks increasing interest rates on what they charge people, including personal loans and mortgages, to name a few.
“People should understand that the increasing interest rates of Federal Reserves affect them indirectly because although they cannot borrow money from them, the banks they borrow from depend on the Federal Reserve,” she elaborates.
This economic trend inevitably decreases people’s buying power. They are unable to purchase as much with the same amount of money as before.
How to get through this recession
Noelle explains that combining inflation, high federal interest rate, and stagnant income results in more people struggling to afford rent, cars, and even food. This is what causes the economy’s recession.
Through her personal experience in surviving the 2008 recession despite all odds, Noelle urges everyone to start learning how to turn their side hustles into real businesses to overcome what may come next.
“When I was in my parent’s basement after losing everything, I started learning about real estate. I studied how I can wholesale properties on my own. From then on, I started earning money. This is also what people should do in their line of expertise,” Noelle explains.
She emphasizes that they should start now to keep up with the upcoming recession. They need to start turning their side hustles, talents, and skills into something bigger or an additional income source so that when the economic collapse comes, they will have money. Additionally, when this recession starts, banks will usually lend more money to businesses,
not individuals. She adds that with the rise of e-commerce and digital transactions, there are no more boundaries in finding clients from all over the world. With the help of the internet and social media, entrepreneurs can easily promote their products and services, reach out to a wider range of possible clients, and eventually turn leads into actual sales.
“You do not have to be a victim of a financial crash when you use your knowledge in turning your side hustle into a real business. If I did it, I believe other people can do it too,” Noelle adds.
Noelle wants to empower people who want to start a business and prepare for what is to come. She invites all aspiring business owners to her GROW YOUR WEALTH CHALLENGE, a live webcast event happening on January 14 and 15 that will explain the ins and outs of business credits and how this can help takeoff businesses and conquer 2023, whatever the state of the economy is.
