Is Rideshare Recession Proof -Part 1-

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June 3, 2019,

The concept of writing this article about what effects an impending economic recession would have on the rideshare industry, came to me because I realized that I have more questions than answers. I ran across something posted recently in MarketWatch (marketwatch.com) and I thought it would be worth sharing. I shall admit; when it comes to economy and securities exchange, I'm usually wrong. However, some basic indicators are hard to ignore.

I have been following the market with my tiny ant account for decades. I pay close attention to indicators such as 10 year treasury curve and several other indexes. On June 3, 2019, the 10-year treasury yield fell to 21 months low of 2.067%, which means investors are dumping stocks and buying US Treasuries, and we know higher bond prices means lower yields. It usually, but not necessarily, signals trouble ahead.

Our economy has a "Boom and Bust" pattern, economic expansions and contractions since 1940's. We have been in a decade long economic expansion. Usually they are shorter. The rideshare business was created during this prosperity period. It hasn't seen a recession, and it hasn't been through tough economic times. Remember 2008? Remember when the unemployment rates were in the double digits just a decade ago? The rideshare industry was nowhere near where it is today. Rideshare, was just in it's infancy.

Despite some indications of an economic downturn, I don't think we will see a "Bust" anytime soon. However, those numbers got me thinking, "Will the rideshare industry be able to withstand a recession? Will people still spend the money to be driven around?"

It's something to think about. I absolutely have no clues and no answers. I went back to check on the taxi business during recession periods and I couldn't find any reliable source of such statistics. Maybe someone reading this knows the answer. If so, please share. There were a couple of posts on MarketWatch which divided the rideshare needs from discretionary, such as driving people to and from social occasions (bars and restaurants), versus staple rides such as driving them to and from work, a doctor's appointment, etc… It really doesn't answer the question. We know rideshare will contract with the economy, but right now, even in good times, ants are crawling on top of each other looking for a ping. What will happen when we have to endure the contraction time?

One thing is for certain. What goes up, must come down. I just hope this doesn't happen anytime soon, and if so, hopefully it will be just a "Soft Landing."

There are thousands of members here, some with amazing knowledge. I hope they share with us some of their thoughts and maybe even give some advice on how to traverse through this uncharted territory, if and when we get there...