Sample Essay On Recession

Assignment 1

Recession is the decline of an economic activity that affects the growth and development of economy negatively. It leads to increased unemployment rates, fall in business profits, drop in the stock market, decrease in inflation rates and slowdown in the housing market among many others. The world experienced economic downfall in 2008 with United States of America being among the most affected countries by the recession. The recession affected negatively the economy of the U.S. For instance, it increased the unemployment rate within the nation. In addition, it led to low standards of living among the citizens following the reduced income.

Decision as to the client should invest during recession

The client who deals with infrastructure should not wait for safer times rather should invest now. Investment in infrastructure business has a steady demand that is efficient during stock market slowdown since it has no correlation to the market. This is because infrastructure such as real estate, hospital and school development among others is producer goods. Producer goods are used to produce consumer goods hence help in economic growth and development. It will be a wise decision for the client to focus more on investing in real estate whose value rise with time.
The demand for rental houses especially is very high owing to the fact that it is a basic need. In addition, schools and hospitals remain very vital to all the communities since it helps to produce consumer goods. Investing in such businesses does not depend much on the prevailing economic condition since they are basic needs hence need to operate at all economic times.

Important economic concept to advise the client

The most important economic concept for the client to consider during investing in infrastructure is risk and return. It is true that the investing during the economic recession is very risk irrespective of the business invested. The concept of risk and return provides that increase in risk leads to increased returns. On the other hand, the low risk leads to low potential of return. However, during the recession time, there is a downfall in the housing market something that makes the clients investment uncertain. As a result, the client needs to focus more on infrastructural investments such as schools and hospitals. Ideally, this is because their demand will remain high following the unavoidable underlying circumstances. For instance, patients will have to visit the hospitals for treatment once ill irrespective of economic hard times. In addition, children are being born as time passes. This is to mean that investing in schools may turn out to bring high returns in the end. The manufacturer needs to increase productivity by coming up with quality infrastructure that meet the need and preferences of the customers. Although the demand for infrastructure remains uncertain, matching the productivity with the demand level may assist the client to reduce the risks of losing his finances.
In conclusion, recession period brings a big challenge to world countries and businesses. It leads to increased cost of living in that people are unable to meet some of their basic commodities. Investing during recession time may happen to be very risk for many forms of business. However, infrastructure business such as rental houses, schools and hospitals have a constant demand that is usually not affected by economic conditions. Investors during such a time need to focus on the risk of investing and the return of that investment.