The economic news is not good, primarily due to the pandemic, our country is heading toward a recession. The Federal Reserve, led by Jerome Powell, has consistently increased the federal funds rate over the past year.
The rate now stands between 5.00% – 5.25%. The Fed’s goal is to reduce inflation. Inflation is the rate at which goods and services increase in price over a year.
We currently stand at approximately 5%, vs 8% last year, so we have made progress, however, the goal of the Federal Reserve is to get inflation to 2%.
To get there, many have predicted we will suffer a recession (a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters).
This article will examine these macro events’ possible impact on drivers and our revenue over the upcoming years.
Background
Most financial publications and news outlets predict we will suffer through a recession. That means fewer things will be bought and sold, fewer houses will sell, and less steak and lobster for dinner.
There will have to be some belt-tightening. Some people will lose their jobs due to lower demand. This happens when our economy gets overheated, as it did with the pandemic.
During the pandemic, the government pumped billions of dollars into the economy. With all the money, prices for goods and services naturally rose, that process creates inflation, and that is where we are now.
Will A Recession Put More Drivers On The Road?
Dara Khosrowshahi, CEO of Uber, stated that the rising inflation was a catalyst for more drivers. As prices increase, more people say to themselves, “Hey, everything is costing more. Maybe I should start driving for Uber and Lyft and make a little extra so I can keep buying everything I want.” That makes sense to me.
According to Uber and Lyft, they now have plenty of drivers, which is is not good for drivers. More drivers mean fewer rides per driver. It also allows Uber and Lyft to pay us less because plenty of drivers will still take our place if we quit.
Now that we are heading into a recession, more people will want to become drivers. For anyone who has lost a job, driving for Uber or Lyft is a simple and easy way to make money, even while looking for another job.
Will A Recession Mean Less Demand For Rides?
Absolutely.
- With less demand for goods and services, there will be less sales.
- Fewer sales lead to less disposable income.
- Less disposable income means people won’t be going out to dinner as often, meaning they won’t be splurging on an Uber or Lyft as often.
If you think there are not enough rides now, you will be disappointed as this recession comes to pass.
How Drivers Can Continue to Thrive During a Recession
What often happens in a situation like this is that more drivers will enter the marketplace and demand for rides will continue to decrease, leading many drivers to toss in the towel.
If you know what you are doing, you can survive a recession and actually prosper.
Here’s How You Can Thrive During Recession
- Be selective about your rides. Only accept rides that pay you well.
- Drive when most drivers don’t. I suggest early mornings, I start at 3 AM on Saturday and Sunday mornings, and late weekend nights. That is where the passengers are, and the drivers are not.
- Focus your driving times around bonuses and promotions. Those extra sources of revenue can greatly impact your driving revenue.
- Become better each trip. Earn those tips. Drive a clean car, play good music, spray that Ozium, and drive like a professional.
Driver Takeaways
All of this economic turmoil is the result of the pandemic. A bat in China or a lab leak in China has caused so much turmoil and death, we survived it.
However, we are still feeling the impact, and this next year will be tricky.
My strategy is to keep my head down, work hard, keep doing the right things, and adjust to any challenges that come my way.
If you are reading this, you have all the knowledge you need to drive and thrive throughout a recession. There will still be plenty of people who need rides. You know how to find them. You know how to game the system to maximize your Uber revenue.
The road ahead may be full of potholes, but it is still a wide-open road, be safe out there.
