oh shit, are we in a recession?

Recession. Hard topic to cover. I am so torn between ‘don’t create unnecessary panic’ and ‘don’t be in denial’.

Are we? Are we not? What’s the definition anyway. Oh, ‘a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.’

Okay I’m no economic expert or nuthin’, but I think there’s a good chance of that happening, caused by reduced country revenue due to falling oil prices and I dunno, A GLOBAL PANDEMIC halting most economic activities in public spaces.

To the government’s credit, they’re doing all they can to mitigate. They’re assuring us they’re doing all they can. The economic stimulus is being rolled out.

But let’s be clear. Now it’s not about thriving and growing, but about risk management and avoiding worse-case scenario. Being overly optimistic in this kind of environment is just stupid.

So let’s keep it real. Don’t mean to brag but I have been spending A LOT of time online, just observing the situation and your reactions, and this is what I saw:

Your net worth probably went down

Unless you’re keeping ALL your money in cash (bank notes, savings accounts), I would be really surprised if your investments and net worth are not affected in this market.

Our stock market went down – there goes your EPF returns. Global stock markets went down – there goes your PRS and roboadvisory platform returns. Property market has been down for ages.

‘Hedges’ are also not dependable. Crypto went down like crazy (traitor!). Even gold, the traditional safe haven – went down!

Personally, I suffered quite a hit.

The only people who are happy with the market are traders, who make money with market volatility (and damn the market is volatile), and cash-rich people, who are waiting to pick up cheap stocks and soon, properties.

You’re lucky if you’re still working/making an income

Work is no longer something we complain about. It’s more like a blessing nowadays – not everyone has it. In fact I would even go as far as to say that having work to do/being employed is a type of flex.

I honestly can’t imagine being in industries that are heavily impacted, like aviation, retail and tourism. I can only hope you have enough savings to last you a while, and/or have a strong support network. There is some assistance from the government but that can’t be enough.

If your income is heavily affected, allow yourself to be sad for 5 minutes (because let’s face it, it is horrible) then get right back into action mode, because life still goes on despite how you feel. Go through my Earning Money articles – there are lots of ways to make money even in a crappy economy, I promise.

Your definition of ‘reasonable comfort’ is about to change

There are two types of people with disposable income: those who live beyond reasonable comfort, and those who think they don’t and are lying to themselves.

Like many people – and yes, even you, don’t think you’re above statistics – I have been living with excesses. Sure, I tell myself that ‘oh but you know I don’t live extravagantly, like the 1%’, but fact is my fridge and pantry do contain RM70/kg Australian cheddar cheese and RM80/kg Colombian ground coffee.

(Groceries is my weak point. Your version might be tech or fashion or whatever else)

If we’re entering a recession, all of our purchasing habits will have to change. Either by necessity, as in we just can’t afford it (and you better make the cost calculation earlier rather than later, so you don’t get into unnecessary debt), or via cultural shift (people spending lavishly and showing it off in social media will be considered tacky, doing it in poor taste).

Extravagance is out, frugalism is in

Like I said in the previous section, people who show off their wealth during a recession will be considered tacky. Some will do it anyway, and we will make them famous, because hey we love obsessing about people we hate slash secretly want to become (whether that’s rich or worry-free).

To be fair, this extravagance -> frugalism shift has been happening for years. You might realise it, you might not and I don’t blame you – frugalism lifestyle gets rebranded into catchy names, like FI/RE and minimalism and small home movement and zero waste and #vanlife and capsule wardrobe and whatnot.

(No, really. Whatever you’re into, there’s a community for it. Look it up: 25 Personal Finance Subreddits For You To Find ‘Your People’.)

But yeah. Expect a lot more lifestyle content to promote frugal values in this upcoming recession. I’ve seen the phrase ‘the joy of missing out’ being thrown about. As someone who does struggle with FOMO and want to experience everything life has to offer, I’m quite happy with this new mindset shift. Was overwhelmed by the choices anyway.

Personally I find myself revisiting this old article of mine: 23 Things That I Can Do At Home, Instead Of Spending Money.

Can the ultra-rich save us?

My final thoughts for this commentary piece. Sure, we’ll do all we can. Personal responsibility and all. We’ll try to earn more, save more.

But what if that’s not enough?

The ultra-rich came up with the funds to rebuild Notre Dame Cathedral SO FAST. Where are they now? If anything, I read that record number of CEOs of the world’s biggest companies stepped down. Over 200 CEOs stepped down in January 2020 alone. They’ve abandoned ship.

Closer to home, have any Malaysian billionaires donated to the Tabung COVID-19 yet? I’m looking at those in the Forbes Top #50 Richest Malaysians list.

Sure, not my money, not my place to tell them what to do, but in this type of situation? Really?

Reminder: 52% of Malaysians have difficulty to raise RM1,000 as emergency funds, and only 24% of Malaysians are able to sustain living expenses for at least 3 months or more if they lose their main source of income (10% can sustain for more than 6 months). Source: Malaysia National Strategy for Financial Literacy (2019-2023) document.

Telling people to save money now won’t help. It’s almost condescending even.

I sincerely hope I’m wrong and they’re already doing risk-mitigating work behind the scenes. I really, really hope so. Because lots of people are going to be hit HARD if the recession hits.

I guess only time will tell. But based on what I see, we’re still caught up in petty squabbles (read: [PERSONAL] Malay and Money: A Reflection) and profiting off each other while defending our right to earn under capitalism, so my hopes for humanity is at an all-time low if I’m honest.

That’s all I have. Sorry to end this so bleakly.

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8 comments

  1. Your worries are not misplaced.
    We have never seen anything like this, and the pandemic is re-establishing a new baseline for everybody.
    It’s back to the basics like you said and recalibrating our priorities.
    Thanks for the heads up.

  2. We did not ask for recession, it was trusted upon us esp Covid-19. Your numbers are really an eye opener. Hope this recession is short.

  3. Quadruple whammy of coronavirus, oil price drop and for Malaysia dependence on oil for a large portion of our government budget while having a government transition during a crisis. I really worry about those who live on daily incomes and for those who live month by month.

    1. thankfully we as concerned citizens can help out by donating

      (telling that to myself – don’t be so stingy suraya think of others not just yourself)

  4. Great articles on addressing the whole fiasco happening right now.

    For the majority of us, this is our first-time experiencing recession. It is becoming clear that having a 3-month or 6-month emergency money is the priority especially in battling through these troubled times.

    Stay healthy.

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