Business and Finance solutions

A recession occurs when too many goods have been produced versus the number of buyers. Why is this a problem? Because if warehouses are filled with goods no one is purchasing, then manufacturers have no reason to manufacture. Profits decline as the retail prices decline. Businesses lay off workers. In turn, the workers apply for government benefits and pay little or no taxes back to the government. That causes increased deficits. Depending on the party in power, higher deficits, especially at the state level may result in higher taxes. That places additional burdens on new businesses.
But a recession also creates certain advantages. It is an employer’s market when so many skilled workers are unemployed. If manufacturers have built too many widgets and your business depends on widgets, then your purchase costs will be greatly reduced. And for consumers, the final product, sitting in the warehouse, will go on sale long before the after Christmas sale.