What is a Recession?

Now that they have officially declared that the US has been in a recession since December of 2007, the stock market is reacting with it's typical (as of late) downward spiral.

So what exactly is a recession?

Wikipedia says that a recession is a contraction phase of the business cycle, or a "period of reduced economic activity"

but what does that mean for you and me, and our own economic activity?

The key is to start making steps to live within our means.

Don't spend more than you bring in, and find ways to make extra money if you need to.

If you have money in stocks, it doesn't mean the best solution is to take that money out. Sometimes it's best to leave the money in a mutual fund, and wait for the markets to turn back up.

We've had four recessions since 1980, and we've recovered from each of them.

Be prepared for company downsizing. Your job may be in jeopardy, so prepare accordingly. Start saving as much as you can, to get you through any job loss or potential loss of income. Dust off that resume, and be sure to update it with your most recent employment history. You don't need to start sending it out yet, but you might. Read up on unemployment benefits, so that you know the ins and outs of the system, just in case you need to file for them in the near future.

Resolve to live simply. Cut down any bills and expenses that you have and can live without, so that you can save more, just in case your income does drop.

Don't listen to those that tell you to "spend" to get out of a recession. But if you must spend, spend responsibly. Shop locally whenever possible, to support local and small businesses that might not be able to survive without your support. Do you really want to help the rich get richer? Skip the mega-mart and support main street whenever possible.