Are We In A Recession? 8 Helpful Tips

Despite the fact that the U.S and a lot of other countries are humming along nicely, with a low level of unemployment, ginormous corporate profit, and retail sales on an ever-increasing streak, there is a nagging worry that we are indeed headed for a recession in the near future.

Are we in a recession? Or is a recession coming?

A recent survey indicates that 4 out of 5 Americans believe that a recession is coming. Believe this or not, wise people will do whatever they can to gear themselves up for whatever might be in the cards.

If it never happens, you had nothing to lose. If it does happen, you were the smart one who was intuitive enough to protect yourself and your assets. Here are some recession preparation tips.

What is a recession?

The dictionary defines a recession as:

A period of temporary economic decline during which trade and industrial activity are reduced, and is generally identified by a fall in GDP in two successive quarters.

Inflation is of course taken into account. Given that inflation in the U.S is currently about 8.5% while across Europe, the inflation rate is at 7.5%, it’s easy to see why nerves are rattled and the fear of a recession is deeply entrenched in peoples’ minds.

In layman’s terms, this means that unemployment rises sharply because people are hanging on to their money and so they stop shopping. This in turn causes a decrease in demand for goods causing employers to terminate more jobs and a vicious cycle ensues.

What causes a recession?

A recession can be caused by multiple factors, from a financial industry fiasco (anyone remembers 2008?) to the dot com bubble shenanigan in 2000. The most recent world event, namely the Covid crisis has definitely played a big part in what we are seeing today.

The shakeout continues as it has for the past two-plus years. Places such as Shangai are back in lockdown. Countries all around the world stopped all forms of tourism which caused a major downtown for the world as a whole. As things are opening back up, the backlog must be dealt with.

This has made for a unique and unusual situation because as said above, things continue to be good. High demand for goods, low-interest rates, and high employment. The government believed the best way to help was by borrowing aggressively and by spending that money in the form of small business loans and stimulus checks, something that most super-rich people objected to.

All that had to come to an end at some point, and to stop runaway inflation, the Feds have now begun to raise interest rates. Another fly in the ointment has been the invasion of Ukraine by Russia. Ukraine is a big supplier of much of the world’s sunflower oil for instance, among other staples.

This has made quite a few of the products increase in price. What we are also seeing is that this has become a catch-all for all price increases. Corporations are now using this excuse to gouge consumers and the profits have been staggering. War is good for business, sad to say.

The stock markets continue to be bullish with some slight hiccups and the real estate market has been on an upturn (partially because of the low-interest rates and the desire for more space post covid) making homeowners wealthy, at least on paper.

Think about it, unless you’re older and are selling your home to fund your retirement and get to keep the profits, you may find yourself “homeless” because you have to bid against multiple people for the next property which might cost more than your previous home and not be as nice.

With all this good news, you would think there was no need to worry. The reality is that this current situation is unsustainable. The old saying “what goes up must come down” applies here.

Are we in another recession?

No, we are not in a recession yet, but the recession fear is here to stay as all signs point to an economic collapse in the U.S. and most other parts of the world.

market stall with colorful fruits like bananas and carrots and pineapples, oranges etc. in the are we in a recession post.
Are we in a recession? Just take a look at the supermarket to get a good ides. Everything is creeping up in price, from groceries to staples, and doesn’t show any signs of slowing down.

 Get ready for recession tips:

  1. Pay off your debt the right way. This means the right order. You should focus on your higher interest rate consumer debt so that you don’t keep drowning as the rates increase further. Now is the time to take a look at maybe knocking down your student debt for instance (perhaps you took advantage of the stop payment order during the covid crisis but now need to pay it down as much as possible.
  2. Top off your cash reserve. This means your emergency fund should not be neglected. Not having this cushion might mean that you need to put expenses on your credit card, further incurring more debt and finding yourself in an impossible situation. A good rule of thumb is to have about six months of living expenses to cover emergencies. This might be too high for a lot of people, but don’t give up. Every little bit helps.
  3. Calm down and assess the situation before making financial mistakes. A lot of people will panic sell during a crisis, but the level-headed people prevail. A recession will certainly be shorter (a year or two) than your retirement which will more than likely exceed 25 years with the current life expectancy.
  4. Educate yourself. During a recession, people with college degrees and higher education fare better because they can be more versatile and will qualify for a bigger variety of jobs. There are a lot of universities and colleges such as elite Havard where you can take free courses that let you become certified online and at your own pace.
  5. Network and expand your horizon. Consider this as a perfect time to network with your peers or acquaintances with an eye open for a better job or higher management responsibility that pays more. Put yourself front and center in their line of vision so that they can remember you when opportunities arise. The extra cash can then go towards applying point number one or two.
  6. Look for ways to reduce your spending. There are of course things you can not cut back on. Fixed and essential things such as rent, mortgage, utilities, and up to an extent food are non-negotiable. Non-essential things that can be cut back on include expensive vacations (think staycation), dining out often (reduce or eliminate and cook at home more), and consumerism. When you identify your wants versus needs, you can make better decisions that will help you hold on to your hard-earned money.
  7. Shop around for the lowest rates, be it credit card or mortgage. Can you take advantage of a balance transfer if your current rate is higher? Did you get a mortgage when the rates were higher and you can still save money all things considered by refinancing? One thing we can be sure of is that higher rates are coming, and they are coming soon as the feds try to prevent a recession in what they call a soft-landing. If you can lock in something decent, go for it. Switching from a variable interest rate to a fixed one will give you peace of mind.
  8. Get rid of expensive toys. I am not talking Playstation here, but rather big, expensive, and unnecessary things that you already have. A gas-guzzling behemoth of an automobile that you rarely use thanks to high prices? Expensive wine collection collecting cobwebs? high-end clothes and shoes sitting in the closet? Sell them and use the money to pay off debt.
Are we in a recession? red and green arrows of inflation and deflation
The rollercoaster ride goes on. It is of the utmost importance that you prepare yourself.

Is the U.S heading for a recession? U.S economic collapse

In my humble opinion, the answer is yes, the U.S is headed for a recession. All signs point to it. We are thick in the middle of “irrational exuberance”, a phrase coined by Alan Greenspan as exemplified by the housing bubble as an example of what is taking place right now.

A U.S economic collapse seems imminent and how long it will take to recover is a question for the gods. A global situation like covid has never happened to such an extent before and l think everyone is grappling to make head or tails of it and it’s all become a guessing game, even for the so-called “experts”. It is therefore important that you do all you can to prepare yourself for a recession. Do you think we are in a recession?

Are you prepared for a recession or any downturn?

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