For many Americans going into the year 2023, we expected that a recession was going to inevitably happen. But where is this recession, and why is it taking so long? Nobody of course wants one to occur, however, knowing whether you should be preparing for it or not is extremely important. In the midst of all of this uncertainty, thankfully, one thing remains clear; experts that were once certain of a recession this year are now unsure of whether one will actually occur.
Where do things stand now?
Going into the year 2023, many experts believed that a recession was certainly going to occur. Fortunately, it would appear that many are actually changing their minds and believe there’s a possibility for things to become stable again. It’s important to keep in mind that there are still a number of reasons why a recession could still occur. Inflation is still at an all-time high, consumer spending has gone down, and manufacturing has also taken a hit.
Regardless of the state the economy is in, it has remained resilient and has not dipped too far down. One thing that experts are urging that we watch, however, is how strong the U.S. labor market is. The labor market is one of the main things that affect inflation, so having a good balance in its strength is important to lower the amount of inflation in general. As we know, high inflation is one of the leading causes for a recession, so slowing it down is currently one of the Federal Government’s top priorities.
How do we prepare if a recession does occur?
In the event that a recession does occur, it’s important that you be as prepared as possible. The amount one prepares for a recession can be the difference between being able to get by or losing your home. Here are a few tips you should follow in order to prepare for a potential recession in the future:
Begin budgeting and preparing emergency funds
For many, budgeting would be one of the first things you think to do when a recession occurs. Unfortunately, by the time the recession hits, you won’t have any other choice but to budget, so doing so early will help you out greatly in the long run. You should determine where you can cut back on spending, whether it be buying less at the grocery store, eating at home, or using less utilities.
This will allow you to save more money, thus creating emergency funds. Emergency funds do exactly what they sound like and should be used only when absolutely necessary. Your goal should be to create enough emergency funds to help you with expenses for a few months. This way in the worst-case scenario of you losing a job, or inflation becoming much higher, you will have something to fall back on.
Pay off any high interest debt
If you have any debt, be sure to pay off any high interest debt first as soon as possible. If we end up having a recession, having less high interest debt will be very beneficial. Just remember that if you think your debt is high now, a recession on top of it will be a much more difficult situation to manage.
Ensure job security
A recession brings much uncertainty in many areas, including one’s job security. Increasing your chances of getting another or keeping your current job should be one of your top priorities. This can involve updating your resume often, working harder to get that promotion, or even picking up a second parttime job if you have the time. There are many ways to ensure you’ll have work, so try to implement as many as you can.
As we have mentioned many times throughout this article, at this point it isn’t 100% clear whether or not we are heading towards a recession. It’s always a good idea to be prepared for that worst case scenario, but things just might be brighter than we originally expected going into this year. Regardless of what the future holds, our hope is that you find this information as helpful as possible.