Many Americans fear we are on the verge of a recession. Inflation is at 8.5%, people are struggling to afford basic goods, and interest rates are higher than they have been in a while. A recent survey from Empower and Personal Capital shows that 85% of U.S. consumers are concerned about rising inflation, 74% are weary of a recession, and over half (56%) say their standard of living is declining.
But does this mean we are entering a recession?
A recession is defined as two consecutive quarters of negative economic growth. Gross domestic product (GDP) is the typical measurement used for economic activity, and it fell by 0.9% on an annualized basis from April through June, which also gave many economists a scare. But according to Morning Consult chief economist John Leer, “there was a general sense that things were slowing down until the July jobs report.” July’s job report showed a considerable hiring surge; the economy added 528,000 jobs. The cost of living has also stayed the same, and gas prices are declining. And although the annual inflation rate was 8.5% in July, it slowed down from an over 40-year high of 9.1% hit in June and below market forecasts of 8.7%.
However, if you’re still afraid of what’s to come, here are some ways you can curtail the effects of a recession and be ready:
- Reduce expenses – give yourself a cushion to combat rising prices of goods or rent
- Save – save, save as much as you can to be prepared for any unexpected expenses (3-6 months’ worth)
- Update your resume – if a recession hits, you should be prepared for much less job security (of course, this can depend on your field)
- Pay your debts – especially credit card debt, to avoid potentially higher interest rates
- Get a side hustle – to help bring in some extra income and beef up that savings account
- Don’t sell off your investments – Craig Birk, Chief Investment Officer at Personal Capital, says, “stocks can be a secret weapon because they offer you one of the best chances to mitigate the impact of inflation and, in the long run, you’re well-positioned to beat it several times over.”
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