Prices Decline During Recession?

When there is an economic expansion, demand seems to outpace supply, particularly for goods and services that take time and major capital to increase supply. As a result, prices generally rise (or there is at least price pressure) and particularly for goods and services that cannot rapidly meet the increased demand such as housing in urban centers (relatively fixed supply), advanced education (takes time to expand/build new schools), but not cars because automotive plants can gear up pretty quickly.
In a boom, we would expect that the demand for goods to rise faster than the supply. All else being equal, we would expect factor 4 to outweigh factor 2 and the level of prices to rise. Since deflation is the opposite of inflation, deflation is due to a combination of the following four factors:

1. The supply of money goes down.
2. The supply of goods goes up.
3. Demand for money goes up.
4. Demand for goods goes down.

We would expect the demand for goods to decline faster than the supply, so factor 4 should outweigh factor 2, so all else being equal we should expect the level of prices to fall.

Tips for maintaining profitability during recession

In order to maintain profitability during a recession, management must be committed to cost reduction. Numerous ideas for cost reduction are discussed for areas such as:
1) financial
2) insurance
3) occupancy
4) communication
5) office and mailroom
6) fixed assets
7) labor and employee benefits and
8) travel, entertainment, and marketing.
Other suggestions include improving cash management via speeding up billing and collection processing and improving inventory controls.