5 BIBLICAL PRINCIPLES THAT WILL HELP YOU NAVIGATE A RECESSION.

Estimated reading time: 14 minutes

What is a recession? Maybe you have heard the word floating around and would like to know more about it. Well, today I want to unpack this word and even give you the characteristics of a recession before looking at the biblical principles that will help you navigate a recession.

• Definition of a recession.
  • Some characteristics of a recession include:
• What are the causes of a recession?
• 5 Biblical Principles that will help you during a recession.
  • • To help us with this, let us look at the story of Joseph.
  • Reassess your budget and expenses.
  • Increase your savings
  • Invest in things that increase in value over time.
    • Scriptures on investments.
    • Ecclesiastes 11:1-6
  • Seek wise counsel.
    • • Proverbs 12:15:
      • Proverbs 13:13:
      • Proverbs 15:22:
  • Tithe and give
• Conclusion

Definition of a recession.

According to CNBC, A recession is traditionally defined as two consecutive quarters of declining economic growth. That is measured by a drop in gross domestic product, or GDP, a measure of the country’s output in the value of goods and services.

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A recession is an economic downturn that occurs over a period of time. These are some of the things that signal a recession:

• A rise in unemployment.
• A decline in trade and industrial activity.

Some characteristics of a recession include:

• National decrease in household income and spending for a period of between 6 months to 3.5 years.
• Significant decline in economic activity spread across the economy that lasts for a few months
• A decline in real GDP for two consecutive quarters. The real GDP, or real gross domestic product, is the total value of all goods and services produced within a particular period, adjusted for price changes. Other shifts often accompany a decline in real GDP such as a decline in employment.
• Consumers avoid making large purchases to cut down on costs.
• Spikes in unemployment with businesses laying off people to cut down on costs.
• Equilibrium disruptions between supply and demand. With consumers spending less at the store, retailers will need to cut down on their inventories, forcing manufacturers to change production schedules. Suppliers making building and infrastructural materials, including steel and cement will be just as affected by the decreasing demand, as a need for those materials will also be in decline. Across sectors, companies with flexible supply chains and the ability to rapidly adapt to unpredictable shifts in demand will emerge with a competitive advantage.

What are the causes of a recession?

• Oversupply. In an economic boom, companies increase production to meet consumer demand. When demand peaks and declines, the excessive supply of goods and services that consumers don’t buy can lead to a recession, with companies producing less and downsizing while people lose purchasing power and consumption continues to fall.
  
• Uncertainty. Not knowing how the economy will change makes business decision-making riskier. Wars and pandemics are two situations that can make consumer trends unpredictable in the short, medium, and long term, thus generating economic uncertainty. Because businesses and people hold off on spending and investment decisions, economic activity declines.
  
• Speculation. Economic bubbles form when the price of something suddenly rises because of speculation, market trends, or consumer confidence. Investors buy it up, hoping to earn a return from the price increase. However, when they sell it off, supply exceeds demand (i.e. there are fewer new buyers) and drives prices down, causing the bubble to burst. This happened with tulips in the 17th century and the housing market in 2008.
• Loss of consumer confidence. Loss of confidence in the economy prompts consumers to stop buying. This leads to a decrease in the demand for goods and services, leading to a reduction in business profit and the need for employees. This then translates to fewer jobs, slow sales, a reduction in production by manufacturers, rise in unemployment leading to a drop in consumer spending habits.
• High-interest rates. With high-interest rates, consumers borrow less because loans become more expensive. This leads to a decline in purchasing power and less spending which leads to yet another vicious cycle ( fewer jobs, slow sales, rise in unemployment, and drop in consumer spending habits) when the high-interest rates persist, this can lead to a recession.
• Credit Crunches Asset bubbles occur when the prices of investments, including gold, stocks, or housing become inflated beyond their sustainable value. The bubble itself sets the stage for a recession to occur when it bursts. The “dot com” stock bubble and the housing bubble came right before the recessions of 2001 and 2008.
• Deflation. Deflation reduces the value of goods and services manufacturers sold on the market. This discourages people from making purchases It is often associated with high-interest rates, which can also cause people to wait to make purchases since they cannot afford to take on debt at such high-interest rates. Deflation also leads to a rise in unemployment. After all, companies need to cut costs since their products have been devalued. And as we all know it is difficult for unemployed people to contribute to the growth of the economy

5 Biblical Principles that will help you during a recession.

To help us with this, let us look at the story of Joseph.

¹⁷ Then Pharaoh said to Joseph, “In my dream I was standing on the bank of the Nile, ¹⁸ when out of the river there came up seven cows, fat and sleek, and they grazed among the reeds. ¹⁹ After them, seven other cows came up—scrawny and very ugly and lean. I had never seen such ugly cows in all the land of Egypt. ²⁰ The lean, ugly cows ate up the seven fat cows that came up first. ²¹ But even after they ate them, no one could tell that they had done so; they looked just as ugly as before. Then I woke up.

²² “In my dream I saw seven heads of grain, full and good, growing on a single stalk. ²³ After them, seven other heads sprouted—withered and thin and scorched by the east wind. ²⁴ The thin heads of grain swallowed up the seven good heads. I told this to the magicians, but none of them could explain it to me.”

²⁵ Then Joseph said to Pharaoh, “The dreams of Pharaoh are one and the same. God has revealed to Pharaoh what he is about to do. ²⁶ The seven good cows are seven years, and the seven good heads of grain are seven years; it is one and the same dream. ²⁷ The seven lean, ugly cows that came up afterward are seven years, and so are the seven worthless heads of grain scorched by the east wind: They are seven years of famine.

²⁸ “It is just as I said to Pharaoh: God has shown Pharaoh what he is about to do. ²⁹ Seven years of great abundance are coming throughout the land of Egypt, ³⁰ but seven years of famine will follow them. Then all the abundance in Egypt will be forgotten, and the famine will ravage the land. ³¹ The abundance in the land will not be remembered, because the famine that follows it will be so severe. ³² The reason the dream was given to Pharaoh in two forms is that the matter has been firmly decided by God, and God will do it soon.

³³ “And now let Pharaoh look for a discerning and wise man and put him in charge of the land of Egypt. ³⁴ Let Pharaoh appoint commissioners over the land to take a fifth of the harvest of Egypt during the seven years of abundance. ³⁵ They should collect all the food of these good years that are coming and store up the grain under the authority of Pharaoh, to be kept in the cities for food. ³⁶ This food should be held in reserve for the country, to be used during the seven years of famine that will come upon Egypt, so that the country may not be ruined by the famine.”

³⁷ The plan seemed good to Pharaoh and to all his officials. ³⁸ So Pharaoh asked them, “Can we find anyone like this man, one in whom is the spirit of God^[a]?” ³⁹ Then Pharaoh said to Joseph, “Since God has made all this known to you, there is no one so discerning and wise as you. ⁴⁰ You shall be in charge of my palace, and all my people are to submit to your orders. Only with respect to the throne will I be greater than you.”

Reassess your budget and expenses.

One thing about God is that He gives us the discernment to understand the seasons and times. It is not inaccessible. In fact, since one gift of the Holy Spirit is discernment, you can ask for it. After all, God gave the sons of Issachar the ability to discern the seasons and times. So why not you? God gave Joseph the ability to interpret Pharaoh’s dream and because of this, the country could store up food that sustained them during the 7 years of famine. There is nothing new under the sun and every season ends. If you are in a season of plenty, then there will come a season of famine. And how you plan today will help you navigate the tough seasons.

With that being said, you cannot live in seasons of lack as you would in the seasons of plenty. Therefore, you need to cut down on costs and spend money on what is necessary. Since it is only a season, practice the art of delayed gratification and recognize that wisdom is key in such seasons. Ask yourself these questions

• What can you cut down on and still have a normal quality of life?
• Will you save later by spending it now?
• When did you last use it?
• Does it add value or is it for enjoyment?
• What percentage of your income are you spending on expenses?

Increase your savings

During the season of plenty, Joseph advised Pharaoh to store up food as a safety net for the rainy days. In this case the 7 years of famine. When you save, you have a better chance of navigating the tough seasons successfully. Just like the 5 wise virgins ensured that they had extra oil, therefore, being prepared when the bridegroom arrived, you too should be ready for the seasons of lack. These scriptures will help you see that saving is biblical.

• Proverbs 21:20 The wise store up choice food and olive oil, but fools gulp theirs down.
• Proverbs 13:11 Dishonest money dwindles away, but whoever gathers money little by little makes it grow.
• Proverbs 13:22 A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.
• Proverbs 6:6-8 Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.

When you have a safety net, you can smile at the future like the Proverbs 31 woman, knowing that should you experience layoffs or even retrenchment, at least you have funds that can cushion you as you figure out your next path. Not only that, having a safety net will also help you make a wise investment should the opportunity arise. Capability and ability are some of the 2 keys that are needed when making investment decisions.

Invest in things that increase in value over time.

Now that you have saved more, it is imperative that you find opportunities that will increase your money. After all, with every opportunity cost, you should receive a reward. Joseph by storing up food were able to increase the prices of goods when famine came which led to an increase in their economy at a time when the world was struggling.

During a recession, there are investment opportunities to lower the investment cost. Investing in stocks when the prices are low will lead to abnormal returns, especially if you are long term focused. In economics, we understand that whenever there is a recession, there is a boom season on the way. And if you buy low whether it is stocks or real estate you are bound to receive a return.

Be on the lookout for opportunities that will increase in value over time. Real estate, stocks, and index funds are all examples of investment opportunities that are long-term focused. There are government bonds that are long-term as well. As you invest, do not forget to assess your risk appetite, too. Another key note is that you should diversify your investment. This shows wisdom and prudence in your dealings. After all, you should never put your eggs in one basket. That is why S&Ps and index funds are a great type of investments.

Scriptures on investments.

Ecclesiastes 11:1-6

1 Invest your money in foreign trade, and one of these days you will make a profit.

2 Put your investments in several places – many places even – because you never know what kind of bad luck you are going to have in this world.

3 No matter which direction a tree falls, it will lie where it fell. When the clouds are full, it rains.

4 If you wait until the wind and the weather are just right, you will never plant anything and never harvest anything.

5 God made everything, and you can no more understand what he does than you understand how new life begins in the womb of a pregnant woman.

6 Do your planting in the morning and in the evening, too. You never know whether it will all grow well or whether one planting will do better than the other.

Seek wise counsel.

Pharaoh knew that if he wanted to successfully navigate the famine season, he had to choose Joesph as the one to steward and give directions. With the recession looming over our heads, it is only right for you to seek professional help. A professional financial advisor will assess your current position and give you options and advice on what you need to do and what you should stop doing. That, as we have seen, is biblical. And to give you scriptures that will help you even gain more confidence in seeking financial help, here goes.

Proverbs 12:15:

“The way of a fool is right in his own eyes, but a wise man listens to advice.”

Proverbs 13:13:

“Whoever despises the word brings destruction on himself, but he who reveres the commandment will be rewarded.”

Proverbs 15:22:

“Without counsel plans fail, but with many advisers they succeed.”

Tithe and give

In my previous post on financial truths that Christians need to know, I talked about the benefit of tithing and its importance so I will not go into details here. I also talked about the benefit of generosity too so check that one out to learn more. But what I want you to know is this: withholding your finances will only lead to lack. The Bible reminds us that when we hold on to wealth, it shrinks, but when we give, we receive more. So it is especially important to tithe and give during a recession. After all, we know God owns everything and promises to take care of us when we put Him first.

Generosity, tithing, and sowing are all attributes you should embrace, especially during a recession. Isaac sowed in a time of famine and he reaped in the same year. And from that harvest, God increased him to the point that he became wealthy. God’s principles will not always look like what the world says. And that is okay. When you follow God, you will experience the financial abundance you need. No wonder He says that He uses the foolish things of the world to shame the wise.

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Conclusion

God wants you to prosper in seasons of famine. He wants to give you abundance so that you can be a blessing to others. And He wants to take care of you. And of course, being wise and prudent is essential so don’t refuse professional advice. I just want you not to panic and worry about your future because God’s got you. When you trust in God with all your heart and do not lean on your own understanding but acknowledge His ways, He promises to direct your path.