What can be a consequence of a recession for businesses?

The consequence of a recession for businesses is often a decrease in consumer spending. During a recession, economic conditions deteriorate, leading to reduced consumer confidence and lower disposable income. As a result, consumers typically cut back on spending, prioritizing essential goods and services over non-essential purchases. This shift can significantly impact businesses, as reduced demand may lead to lower sales, necessitating adjustments in inventory, pricing strategies, and staffing levels.

In contrast, the other options do not align with typical recession effects. For example, an increase in hiring is usually unlikely during a recession, as businesses often look to cut costs rather than expand their workforce in challenging economic times. Similarly, expansion of markets is less common during a recession, as companies focus on maintaining existing operations rather than seeking new growth opportunities. Higher prices for goods can also be hard to sustain when demand drops, as competitive pressures often lead companies to reduce prices to stimulate sales. Thus, a decrease in consumer spending stands out as a key consequence of recession for businesses.