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Can the Fear of a Recession Cause Depression?

July 20, 2022

5 min read

Author : United We Care
Can the Fear of a Recession Cause Depression?


Depression is the result of fear of a recession. It has become a common phenomenon with the increase in unemployment in underdeveloped and developing nations. Depression caused by the fear of a recession can cause anxiety, stress, or even drug abuse in adults because a recession leads to a downward trend in the economy.

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What is a recession?

A recession is a downward trend in the economic cycle when there is a decline in a country’s financial activities. A recession can last for a few months to even years. According to financial experts, a country goes into recession when the gross domestic product (G.D.P.) experiences a negative trend. Increased unemployment, falling sales, and decreased income and manufacturing accompany a damaging G.D.P. Recessions are an unavoidable part of an economic cycle.
Recessions are primarily brief and occur when any economy has reached the peak of its economic activity. A recession ends when the economy is at its trough. An economic recession may result in high-interest rates limiting liquid money in businesspeople’s hands. A sudden crash in the stock market can also lead to a recession in the economy. In many cases, poor business management might lead to recessions because companies cannot repay the loans they take from various sources.

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Can the fear of a recession cause depression?

The consequences of recession can be physical, emotional, and mental. A recession can lead to mental disorders such as anxiety, stress, and even depression. During a recession, when economic activities are at their lowest, many people lose their jobs or are in constant fear of losing their jobs. Recessions also reduce salaries, affecting adults financially and psychologically. Adults who lose their jobs during a recession are four times more susceptible to mental illnesses than those who do not lose their jobs.
Depression caused by the fear of a recession is shared among the unemployed because the responsibility of supporting a family is enormous. When they lose their source of income suddenly, the level of anxiety and stress reaches its peak. Moreover, a recession also leads to a loss of social interaction when a person loses their job. Financial burden, social estrangement, and stress lead to depression due to the recession, which becomes difficult to manage.

What are the effects of depression due to the fear of a recession?

The effects of depression due to the fear of a recession are huge and can hurt the entire society and work culture. Some of the products of depression due to this fear are the following:

  1. Depression affects not only the person who loses the job but also their coworkers. When they continuously see friends and colleagues losing their jobs, they suffer from the fear of instability. It results in a lack of motivation and, subsequently, lower productivity.
  2. Employees who do not lose their jobs in a recession suffer from continuous guilt when they see the struggle of coworkers. It leads to depression in them too. As a result, it hampers their productivity as well.
  3. A recession might cause a reduction in pay instead of a loss of jobs. But according to psychologists, even a slight decrease in your salary can hurt your psychological health. Such employees are more susceptible to severe mental illnesses.
  4. The effects of depression due to the fear of a recession can be family tension or divorce. When a person suddenly loses a job or faces a salary reduction, they cannot carry out family responsibilities properly. Fees for children, medical expenses, and monthly expenditures become topsy-turvy. The depressed person cannot take such a huge burden, leading to emotional outbursts, quarrels, or even fights.

How to deal with depression due to the fear of a recession?

Depression Due to a Recession
It is essential to deal with depression due to the fear of a recession because this depression affects mental health and hampers the nation’s overall productivity. When employees are depressed, it negatively impacts the entire work environment. The question is how to handle the fear of a recession with care.

  1. Firstly, a recession happens in any economic circle. Therefore, people have to prepare mentally for recessions. They should realise that a job loss or reduction in salary is not the end of the world. They should look for better alternatives rather than being depressed and tensed.
  2. The government should take proper steps to control the adverse effects of a recession. The government of any nation should focus on public awareness and medical treatment of people at a high risk of a recession-induced loss of income.
  3. Moreover, people suffering from the fear of a recession can also go for professional counselling to better deal with the adverse effects of this financial crisis.


Employment is a crucial requirement for every individual to access life’s necessities. However, a recession can lead to a loss of employment. Therefore, many people suffer from depression due to a recession. The constant fear of how to manage family responsibilities if they lose their job or with a salary reduction is what causes this depression.
Constant fear and anxiety lead to pent-up tension and consequent depression. But depression due to a recession needs to be handled with care. Family members and colleagues should offer mental support instead of negatively reacting to the loss of income. A recession is a temporary phase and is not more important than a person’s life. Policymakers should invest in public awareness of recessions to make people more conscious of its side effects and how to overcome them.

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Author : United We Care

Founded in 2020, United We Care (UWC) is providing mental health and wellness services at a global level, UWC utilizes its team of dedicated and focused professionals with expertise in mental healthcare, to solve 2 essential missing components in the market, sustained user engagement and program efficacy/outcomes.

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