If you are the breadwinner of your family this should be the question surfacing on top of your mind all the time.
Why do we fear for recession?
For that we should know when the next recession will tentatively start. As per the economist, first the Federal Reserve correction/ action should happen and then the tentative timeline for the next recession will be 12-15 months from that date.
The best one to predict with the nearest possible accuracy on the occurrence of Recession is the Stock Market. So far the stock market has predicted almost 5 recessions accurately from March 1961.
The recovery period or the average growth period of economy between two recessions is around 5-6 years taking the past records from WWII era. But if we consider the last recovery of the earlier recession which happened in 2009 with the 6 years average growth period, we are almost exactly on the 6th year. So on this calculation the recession is some there in the corner for sure.
What is the first sign?
As I said earlier stock markets only can predict the scenario in a more accurate way than others. If we take the stock market data points, the first sign of recession has already happened on August 24, 2015 with the big crash by the Chinese Stock Market mounting to a loss of nearly 40%.
The second sign is, during 2007 the Federal Reserve was only 500 Billion whereas today it is 1.6 Trillion. The 1.1 trillion dollar is now idling with just 0.25% interest in the Fed reserve. Can fed reserve let it go for long time?
Banks are not ready to lend this money to others as it didn’t see any credit-worthy borrowers. When we take the above two data points alone, we can predict that the recession is almost there in the corner. Markets were able to recover from August 24 crash. But it is still 12% below than average till date.
So we can conclude that the next recession will not delay beyond 12-15 months from December 2015 – February 2016. The peak period will be between mid 2016 to early 2018. If this didn’t happen then don’t worry till 2020.
Now let us come to the original question. Will my job survive till next recession?
It all depends on which path your current or new company is going to take.
Companies will first focus on Profitability. They will do all possible to increase the Gross Margin. The simultaneous step any company will do is to Cut the Costs even if they don’t see any reduction in the inflow of money. This will help the company to Preserve the Cash
Cockroaches thrive more during disaster period not just in Personal life but also in Profession life too.
If the company is going to increase the Gross Margin, they will automatically stop recruiting high paid profiles. If required, they will let go the non performers on the same high paid profiles. Since the company itself
is going to apply all the possible strategy to escape from the recession, it is implicit that every employee should go all possible extra miles to increase their performance in the current company and secure their job.
If we join a new company now it will take nothing less than 6 – 12 months to prove our efficiency beyond the luck aspect. By then it will be the actual starting point of the peak recession. If we fail, then we will be the first one the company will let go.
So apply your common sense and take a decision to secure your job wherever you are.