A “major” recession may be around the corner: How should Christians respond? 

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A “major” recession may be around the corner: How should Christians respond? 

May 19, 2022 -

© Yakobchuk Olena /stock.adobe.com

© Yakobchuk Olena /stock.adobe.com

© Yakobchuk Olena /stock.adobe.com

Buy low, sell high. 

That phrase is the most straightforward idea in investing. It’s used so often that it’s a cliche. And yet, when the stock market crashed in 2008 in the Great Recession, many people sold their life savings. Then, they bought high when the economy recovered—the exact opposite of the simplest investing truism. 

Since then, America experienced a brief recession at the beginning of the pandemic in 2020, but we recovered quickly. 

Now, many experts are warning of another recession in the next year or two, and it might be “major.”

Why the economy is unpredictable 

While it’s tempting to think of economics as a math problem, that is far from the truth. Even though economists might diagnose the same problem, they often promote polar opposite solutions. 

The problem is that the economy is basically unpredictable. This is partly because it’s based on people’s subjective attitudes, not just the numbers. For instance, if the economy is strong but everyone thinks it’s going to collapse, the economy will decline and become a self-fulfilling prophecy. Plus, natural disasters, wars, and pandemics obviously affect the economy in critical ways. The war in Ukraine and COVID are currently affecting our economy in America. 

The economy is somewhat unpredictable because it depends on unpredictable factors. And yet, it greatly affects our daily lives. The way the government, banks, investors, and the masses react will have consequences for us and our families. 

Sound like a recipe for controversy? 

You bet (no pun intended). 

Why is everything so expensive?  

Inflation. 

You’ve probably seen the news that inflation hit a forty-year high at 8.5 percent in March. 

If my fancy cup of coffee cost $5 last year, it costs nearly $5.50 now. Of course, there are higher stakes than just that cup of coffee. Inflation has sweeping effects on every area of life. But the interesting thing about our position is that, for right now, I’m willing to pay that extra fifty cents.

Consumers (economists’ word for you and me when we’re spending money) are willing to buy things for higher prices because we have cash from stimulus checks, money saved up from the pandemic lockdowns, and interest rates have been low. Unemployment is low, which means people have money from jobs to spend as well. 

Even though things are costing more, broadly speaking people are willing to pay more as well. On top of this new demand, supply chain issues have made it harder to make or get certain products. Companies are lagging behind the new demand, which means supply is lower. 

Supply is down and demand is up, so prices go up, but folks are willing to pay that price. Economists call the state of our economy “hot.” 

But nobody wants gas to cost $4.30 per gallon or our grocery bills to be one-tenth more than last year forever. 

So, how do we stop prices from skyrocketing and inflation becoming entrenched?

Is a recession coming?

Even though unemployment is low at the moment, many are predicting that our economy will enter a recession in the next year or two. This potential for a recession is a leading factor in how volatile the stock market is. But why are so many analysts predicting a recession? 

The US government is trying to give a “soft” landing to the economy as it catches up to the price of goods. To do this, they are increasing interest rates, which would hopefully slow down people’s spending (lowering demand). This would slow economic growth, but that’s the whole point—we’re growing too fast for our own good.  

This could either lead to a “hard landing” or “soft landing” for the economy. The hope is that the perfect “Goldilocks path” will play out and inflation will slow while we avoid a recession. But, a recession would happen if people become too tight with their money and the economy has a hard landing—a recession.  

Recessions are a cycle: people stop buying things, businesses have less money, they lay people off, then those people spend less money, etc. 

With interest rates higher, people need to put money toward paying off loans and mortgages, which means less money to spend, which should cool off the economic growth. But, if we spend too little, then the economy won’t just slow down and lower inflation; it will plummet. 

A little over half of Wall Street professionals think a recession is around the corner, and most small business owners do too. 

If a recession does hit, you may experience the potential real-world consequences: lost jobs, businesses going under, and retirement investments dipping at alarming rates (at least for a short time). 

However, many economists believe in a hard truth: recessions are sometimes necessary. And, in the long term, a recession will at the very least reduce inflation. 

How should Americans respond? 

Don’t panic. 

One factor that gives rise to the economy is people’s confidence in the economy itself. For both the collective welfare and yourself, not panicking is the best option. Recessions are (probably) a necessary part of the economy. We just need to be ready to weather them.

There are many ways to prepare for a potential recession. Nerdwallet suggests:

  • Save more with a spending plan.
  • Bolster your emergency savings.
  • Try to get ahead of debt.
  • And “keep calm and invest on.” 

So, consulting a financial advisor and saving up a bit more than usual are probably good ideas in the face of a looming recession. People with a bit of extra saved money might do well to invest some during the recession. (Remember “buy low, sell high”?) 

For some people with lower incomes or living paycheck to paycheck, this is impossible. And it’s retail workers, people in the service industry, and others who are often hit hardest in recessions.  

How can Christians of all levels of wealth respond to this need? 

How should Christians respond to a recession?

Don’t fear

Money is shorthand for our society to talk about value. It’s incredibly useful and has allowed us to achieve great prosperity. But, Christians don’t always value the same things as the world, which means we will be spending our money a bit differently. There are 2,350 Bible verses about money, so the Bible has a lot to say on the matter.

Let’s look at some critical (paraphrased) teachings by Jesus about money. 

  • Don’t extort money from people whom you have power over (Luke 3:14).
  • We must guard against covetousness. Possessions don’t give us abundance (Luke 12:15). 
  • Be generous to those in need, both within the faith and from without (Matthew 5:42). 
  • Riches are deceitful (Mark 4:19). 
  • Don’t worry: Christ will meet your needs (Matthew 6:31–33). 
  • Your heart follows your treasure (Luke 12:34). 
  • The amount doesn’t eternally matter; the heart and sacrifice behind it do (Mark 12:41–44).  

Countless other teachings on money fill the Bible, helping us walk through our daily lives in love and generosity. The economy is fickle and unpredictable (something the Bible reveals to us) and it’s a good reason why the Bible commands us to trust in God, not wealth.  

How can Christians help others in a recession?

In the early church, Christians shared money freely with one another (Acts 2:45). Providing for others is central to our faith. 1 Timothy 5:8 says, “If anyone does not provide for his relatives . . . he has denied the faith and is worse than an unbeliever.” And, speaking of generosity in a parable, Jesus says, “As you did to the least of these my brothers, you did it to me” (Matthew 24:40).

Paul says for those who are wealthy, “Charge them not to be haughty, nor to set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy. They are to do good, to be rich in good works, to be generous and ready to share, thus storing up treasure for themselves as a good foundation for the future, so that they may take hold of that which is truly life” (1 Timothy 6:17–19).  

God’s wisdom here is profoundly applicable: wealth is not “truly life.” So, let’s not allow money to get in the way of a fulfilled life. If an American recession sounds like an existential crisis, we should probably shift our priorities. In a recession, believers who are well off can bless families that are laid off or are falling behind. 

“In all things I have shown you that by working hard in this way we must help the weak and remember the words of the Lord Jesus, how he himself said, ‘It is more blessed to give than to receive” (Acts 20:35). 

Let us love God and neighbor, not money. Let us deal wisely with our money. Let us serve one another in times of recession. Let us be generous with whatever the Lord blesses us with and be thankful for what we do have. 

In God’s upside-down economy, we should share more during a recession, not less. Visit places like Buckner International for ways to help.

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