Economic Update and What You Can Do to Thrive in a Bad Economy

Even though governments haven’t admitted it, most people can notice that money isn’t flowing as much as it did just a couple of years ago.

Now the title says “bad economy” and not “recession” because recession has a technical definition (which can be oversimplified to 2 consecutive quarters of declining GDP).

GDP numbers are not that hard to game (imputations, changing the base years, changing weights, etc.).

Usually both ruling and opposing parties are incentivized to lie about numbers like GDP and inflation for various reasons which are outside the scope of this article.

The thing to remember is that recession is officially declared only once it’s impossible to maintain the facade anymore. For example, the 2008 financial crisis began in early 2007 but was officially declared in December, 2008, about a full year after it had begun.

Summary of the last few years

Although I did the long version of this in The State of the World series, the quick financial summary of the last 10 years are as under:

2015-2019: Growth was fast and easy. Even mediocre businesses were succeeding because money was being spent without a lot of thought and liquidity was high.

Spending on high end status goods was viewed as “aspirational”. Jobs were easy to come by and layoffs were not common.

2020-2021: Peak Covid years where the difference between physical and online businesses was heightened.

Physical businesses lost a lot of money and many shut down. Even the ones that were doing really well had to close their doors in some cases because they couldn’t afford to pay rent for a store they could not put to use.

Online businesses pulled in record money in these years without even trying. Literally anyone who put even a little bit of effort in an online business got some money in his bank.

Stock markets did not crash for long due to things like money printing and the manipulation of interest rates.

2022-2023: These were the inflection years. This was the first time the people who began online businesses since 2013 or so had their first flat or down year.

The Ukraine war was/is in full force and is a tool used by Russia to force the Western powers to burn endless quantities of resources into a venture they have no hope of winning with the only goal of “saving face”.

Interest rates had to be pushed up because all the money printing of 2020 and 2021 was creating too much inflation despite the best attempts of governments around the globe at hiding it.

There were lots of layoffs as demand was slowing down, especially in tech. VC money was much harder to get than before, and many companies were forced to understand the basic reality that the job of a business is to make a profit from the products they are selling, and not just to “raise money”.

2024-2025: These have been flat to down years for most online businesses, with 2025 being a down year for most businesses. In 2025, it was 5x harder to find customers than it was in 2020.

Conversion rates are lower across the board in most products. Prices of inputs/raw material are higher because of inflation and tariffs.

Inflation is “under control” due to the high interest rates and lower money printing, but it still exists and prices have not come down (that would be deflation).

AI is now into the picture with many companies trying hard to replace workers with software to save money. As a result, in many fields (especially tech), it is much harder to find a job than it once was.

Promotions and bonuses are lower, and layoffs have become “normalized” and are no longer a dirty word to be frowned upon. In fact, announcing layoffs makes your share prices climb because it means you’re at the top of your game replacing people with technology.

2026: This is turning out to be a strong down year for most people and it looks like the economic troubles are going to continue for a while with more fuel added to the fire by the war in Iran.

The Iran war is special because it is the last throes of the American Empire (historically no empire goes down in silence).

The American people’s understanding of this war can be described as “bomb them all” which is their mentality for most wars given that they are located in a continent separated by oceans on both sides and thus do not have to worry about retaliation, however this also makes them predictable.

Iran is basically suicide bombing the global economy (Iran is the suicide, America is doing the bombing) in order to free what it views as the “Muslim world” from American control (who they view as infidels/kafirs).

The problem is that both objectives are not mutually exclusive. In other words, both sides are achieving their goals i.e. no long term compromise is possible because everyone thinks they’re at the top. The USA will destroy Iran, and Iran will destroy American control of the Middle East.

This is not to mention that the USA can’t back out because it must protect its petrodollar hegemony over the world (and suck costs and to save face), and Iran can’t back out because the Americans do not treat people who lose to them well (look at what they did to Iraq and Libya).

I could be wrong about this, but if I’m right, this means that the economy will suffer more in the coming years and that this war is going to last much longer. Maybe 5 more years or maybe 20 more years.

In other words, you must prepare or you must suffer. If you prepare well, you can thrive. As history shows, many fortunes have been made during the downturns.

The Next Few Years

Inflation will continue to creep prices higher but income will not increase because:

1. AI means fewer jobs are necessary i.e. there is a labor oversupply i.e. you can get away with paying people less
2. People under economic pressure try their best to spend as little as possible, and this is now the majority (50%+) of the population

In other words, you’re looking at stagflation. This has actually been going on since 2024ish and will continue to go on.

What practically happens in a stagflationary environment is that:

1. The rich get much richer as the value of their assets climbs up
2. Everyone else gets poorer as they don’t have much in assets and depend upon an active income that doesn’t grow faster than inflation

The dorks call this a K shaped economy because they want to sound smarter to their dork friends, but it’s basically the rich getting richer and everyone else moving down the socioeconomic ladder.

Another way of looking at this is that the middle class is being eliminated.

If you were upper middle class, you are now middle middle class.

If you were the middle middle class, you can now afford a lower middle class life.

If you were lower middle class, you are struggling to keep a roof over your head.

If you were poor, then you’ve given up any hope you had in life.

Just look at people who work menial jobs like waiters, cooks, service staff, janitors, food delivery guys, etc. They have no hope left in life, which means that eventually they will revolt against the system.

The smarter readers have already figured out that this is yet another reason behind these endless global conflicts. The powerful and elite are trying to kill off as many male poors as possible because they do not want these people revolting against them.

What You Can Do to Thrive

If you do not have an online business

First of all, if you do not have an online business and aren’t even trying, you simply do not have any hope to thrive in the coming years. All you can do is cut costs and accept that you are going to go down 1 or 2 steps in the socioeconomic ladder.

You had 10+ years to build multiple online businesses and you did not take the chance on yourself.

Now, in an ideal world, you would not need to build a business just to progress in the world or at least maintain your socioeconomic position, but unfortunately, you do not live in this ideal world.

You must either build an online business, or accept that your life will not be as good as it “should” have been. If you get laid off, you might have to dip into your savings and they can get wiped out sooner than you think.

I should mention that I am not the cause of the problem, I am simply telling you what’s going to happen. Don’t shoot the messenger.

The economy is going to be bad for some time, inflation is going to push prices higher, AI is going to get better and better, and you will have to work harder to earn the same income (or just to retain your job).

In simple terms, you will have to work harder to support a worse lifestyle, and feel “grateful for keeping your job”.

I would tell you to build an online business still (e.g. build an X account, or copywriting, or web design, or KDP/Audible, or SAAS, or whatever else), but the fact that you haven’t done so already means the probability of you taking action is close to 0 percent.

Some people are born to be employee slaves to their employer masters and that’s fine.

Just like how many people won’t stop overeating despite being obese and diabetic, and thus dying from a heart attack decades before their time.

You can’t save everyone.

If you have an online business

You are doing much MUCH better than the masses. Even if you had down years. Even if you’re barely making $500 a month.

Why? Because you have a fighting chance.

What you’ve already realized by now if you’ve read this far is that there are only 2 profitable markets left:

• Catering to the rich (who are getting richer)
• Catering to people who are downgrading and trying to save money

Everything in the middle is going to suffer. If you’re in the middle segment, you MUST rebrand and create products that target either the rich or the downgraders.

Either come up with ultra premium products that only the rich can purchase. High end luxury items and services. Rich people are not stopping their spending just because the economy is not doing well for most other people.

Or create products that people looking to save money will want to purchase. “Value for money” is the key here. Remember that your competition is shutting down and their customers will have to go somewhere.

Simple examples:

E-com clothing and accessories: Either sell premium fabrics, bespoke items, etc. targeted to the rich, or affordable basic clothing people looking to save money will buy.

Services: Either sell cheap SaaS (<$20 a month) or higher priced done for you services ($500+ in third world countries / $2000+ in first world countries). The $50-$100 monthly service targeted at small businesses is going to get squeezed.

Fitness coaching: Either go 1-on-1 for premium clients for high prices and offer them comprehensive services (nutrition, training, everything included) or sell cheap programs that people can just buy and use without dropping a lot of cash (the AJA Cortes model).

You will need to do some trial and error and experiment in your own business to figure out which way you want to go. There’s plenty of money to be made in both directions.

The good thing about online business is that the cost of failure is very low, so the game is about tinkering till you find something that works.

How to Prepare for The Future

Now this downturn is not going to last forever (war or no war). At some point, the governments will decide to fix the problem with their standard solution to all economic woes: print money and lower interest rates.

In other words, consumer spending will eventually return (the “catch” is that asset prices like for houses will go up and most people will never be able to buy them).

What you need to be doing NOW is:

1) Build and release new products.

Even if they don’t make that many sales at launch, they will once the economy is better.

If you do the work to build new products (including sales copy, collecting testimonials, etc.) you will be sitting pretty once people have money to spend.

To draw the same analogy as Charlie Munger, you go up like a duck in a flooding lake. You will rake in cash without extra effort.

Do all that work now, so you can maximize the years of the boom years when they are back.

2) Build an audience.

This was always a winning move, but it became even more of a winning move once AI tools entered the market.

Back a few years ago, developing software was actually hard and one of the bigger barriers to entry to many online businesses was that you needed to either be a developer or find a “technical partner”.

This limitation no longer exists (as much) and the way things are going, the concept of “developing a SaaS” is going to be a simple thing that anyone can do with some plain English prompting.

We’re not fully there yet as AI code is buggy and has poor security but even with today’s rudimentary models, there are people who are making millions of dollars with purely “vibe coded” applications.

In other words, the main skill of the future is not “coding” but marketing and being able to reach people.

To put it in even simpler words, the influencers people like to despise are actually in the strongest position in the future because they can reach lots of people who trust them at scale.

If you have an audience, you have a HUGE moat (unfair advantage) and can easily build products and turn it into a business.

If you do not have an audience, you are actually going to eventually be left behind by someone who does. This is for the simple reason that they can just clone your product with AI and sell it to their audience without needing to incur marketing expenses.

Basically, you should build an audience. There are 0 downsides and unlimited upsides. Pick any platform like YouTube, Instagram, X, TikTok, or whatever else you like and create high quality content.

If you choose X, check out The Art of X because it’s going to take you to the promised land without wasting your time.

If you choose other platforms, you are on your own. This doesn’t mean it’s not possible (it is, and tons of people succeed every day), it just means that your chances of failure go up without expert guidance. You should take the chance anyway, because what do you have to lose?

That’s all for this piece.

See you in the next one.

Your man,

Harsh Strongman