What is 'Sluggish Economy'

A sluggish economy is a state of an economy in which growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts.

BREAKING DOWN 'Sluggish Economy'

When the economy is in a sluggish state, it is generally harmful for a business since consumers and other businesses are less likely to purchase its products. A sluggish economy also has a negative effect on the labor market as businesses are less willing to hire more staff in times of weak economic growth.

Financial media often use the term "sluggish economy". For example, you will often see headlines like "Economy Sluggish due to Rising Oil Prices."

Good Businesses to Start in a Sluggish Economy

It may seem counterintuitive, but a sluggish economy is actually a great time to start certain types of businesses. Less competition for customers and lower marketing costs can create conditions conducive to success. Here are some of those business types:

  • Debt Collection: While debt collection is not an especially pleasant business, it's one that generally does well during economic downturns.
  • Healthcare Products: An aging population with declining health is going to purchase healthcare products and services—recession or not.
  • Job Search Agency: When people lose their jobs, they often turn to employment agencies or job search firms. 
  • Mediator: In tough economic times, many people turn to mediators rather than attorneys to settle disputes simply because they are less expensive. If you're skilled at negotiating, this may be a solid business opportunity. 
  • Security Firm: Security firms usually experience a boom during a sluggish economy. The security business is not just about security guards; it's also about performing security and background checks for employers. 

Marketing During a Sluggish Economy

A struggling economy actually presents an opportunity for marketers. In such scenarios, people are seeking reasons to feel good and the tough economic times have likely thinned out competitive marketing and advertising efforts. This presents a greater opportunity to be heard by a market. They key is to provide attractive offerings, both in appearance and in value and to use creativity to meet their needs while making them smile and relieving stress. If a company can accomplish that outcome, even if a customer isn't ready to make a purchase immediately, once their finances improve, they'll remember how you made them feel through your marketing efforts. A marketing campaign that uplifts its potential customers can differentiate itself from products that are otherwise the same. It's all about give your audience a reason to buy from you.

RELATED TERMS
  1. New Economy

    New economy is a buzzword describing new, high-growth industries ...
  2. Economy

    An economy is the large set of interrelated economic production ...
  3. Old Economy

    Old economy is a term used to describe companies that enjoyed ...
  4. Growth Recession

    Growth recession describes an economy that is growing at such ...
  5. Closed Economy

    A closed economy considers itself self-sufficient and has no ...
  6. Mixed Economic System

    A mixed economic system is one that features characteristics ...
Related Articles
  1. Financial Advisor

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  2. Personal Finance

    Market Economy

    In a market economy, economic decisions and prices are determined by market forces rather than by central planning.
  3. Investing

    Impact of the Chinese Economy on the U.S. Economy

    The economic growth of China has been decreasing since 2010. What impact does this have on the US and the world economy?
  4. Financial Advisor

    3 Global Economic Challenges for Investors in 2016

    Read about areas of concern for the global economy in 2016. See how China's economy may be slowing down, although it is difficult to get an accurate picture.
  5. Insights

    5 Upcoming Market-Moving Events

    If you can anticipate the news that these reports contain, your portfolio will be in for some huge gains.
  6. Investing

    What's a Centrally Planned Economy?

    A centrally planned economy is one where the government controls the country’s supply and demand of goods and services.
  7. Insights

    What is jobless growth?

    What are the effects that a jobless growth economy has on workers and investors alike. Learn about these effects here.
  8. Insights

    Is the U.S. Economy Really Improving?

    The U.S. economy might be improving for some, but not for the majority. Here's why.
  9. Personal Finance

    Basic Economy: Pay the Same, Get Less?

    Basic economy is supposed to be cheaper, but are you just paying the previously regular economy fare and getting less for it?
  10. Investing

    3 U.S. Equity Market Trends in 2016 (SLX, SPY)

    Learn about three U.S. equity market trends that are impacting stock prices. How these trends resolve will determine winners and losers in the stock market.
RELATED FAQS
  1. What's the Difference Between a Market Economy and a Command Economy?

    Set by supply and demand, a market economy operates through a price system; in a command economy, governments control the ... Read Answer >>
  2. US stock market in the economic downturn

    Stock market is said to be the barometer of its economy. But there are many other factors that can lead to a disparity between ... Read Answer >>
  3. What effect do stock buybacks have on the economy?

    Learn about the effect of stock buybacks on the economy. Stock buybacks lead to rising stock prices as the supply of stock ... Read Answer >>
  4. Globalization and International Investment

    Learn how globalization impacts international investment and transforms economies around the world. Understand the implications ... Read Answer >>
  5. What are some examples of economies of scale?

    Take a look at different examples of economies of scale, including how marginal costs can be reduced through external and ... Read Answer >>
Hot Definitions
  1. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  2. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  3. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  4. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  6. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Trading Center