Thousands of people are without jobs as businesses prepare for a rising recession in Canada. This month, companies like Meta, Twitter, Microsoft, Lyft, Netflix, Spotify, and Amazon have been laying off workers to prepare for the harsh impact of a recession. So far, there have been severe impacts made to the technology industry.
Strong inflationary pressures are adding to the cost of living, making it hard for consumers to spend their money. As a result, businesses are struggling to have money added into their institution when customers are not buying as frequently into products/services. This means there is not enough revenue to cover business expenses, like salaries/wages, resulting in companies laying off more employees. Our blog on the Minimum Wage Rage covers similar topics.
Why is it costing more money to buy the same things?
Let’s look at it from an economic perspective; a lot of it has to do with supply and demand. A high demand for a product/service that is of low supply can result in price discrepancies. As well, businesses want to keep increasing their revenues that presents their overall success. If it cannot be increased by the quantity of customers, that is where we can see increased price points. A smaller number of customers would be willing to pay a higher price for the same product, thus driving up the overall costs to produce and sell.
Where do we go from here?
As we head into an expected recession, now would be a good time to effectively manage your finances. While this may not be ideal for businesses, you need to be mindful of your financial abilities during this time::
- Refrain from taking on new loans or large investments.
- Save more of your money and limit high spending patterns (especially with the holidays approaching).
- Set financial goals to have enough money that can maintain expenses for at least three to six months.