A bad economy can do a number of different things that effect just about everyone living in the area that is experiencing the downturn. From problems that persist in the housing market, to problems that persist in the area of small businesses; an economic downturn is not an easy process to endure. Many people feel the pinch in one way or another, and unfortunately, it can take a great deal of time for an economy to recover. As a result of this, people who were effected towards the beginning of the downturn, must endure the bad economy as it is escalating, as well as the slow recovery time; this is one of the worst aspects.
When an economy begins to take a turn for the worst, the small businesses are at the front lines and are typically the first to get hit as a result. These businesses employ a large number of different professionals that cover all ends of the spectrum. The reason why these smaller businesses tend to take the first hit is due to the fact that they do not have as much money on the backburner to keep them afloat as do larger businesses. As these businesses begin to fail, employees are laid off, and household income takes a drastic hit.
As households begin to take hits, they miss paying bills such as credit cards, car payments, and the mortgage. This results in the deterioration of credit scores which makes it more difficult to get future loans from financial institutions. Simultaneously, repossession of property results which causes even more problems for the households, as well as lost money for the financial institutions. All of these issues rotate in an endless cycle, gradually digging a deeper hole, and gradually effecting more people the next time around; till it gets to the point where nobody wants to make purchases, and nobody can obtain a loan. Lack of loans means a vast decrease in the housing market.