Recession fears are sweeping the financial world as stock markets tumble, layoffs rise and economic warning signs become more pronounced. The most obvious sign is a surge in unemployment, when companies slow or stop hiring as demand for their products plummets. That usually means a loss of income for the average person, and while we have a robust social safety net, recessions can be financially devastating for many people.
While it’s impossible to know with any certainty if we’re about to experience the “R” word, a number of factors are raising alarms, including an actual recession watch maintained by the Atlanta branch of the Federal Reserve that suggests there’s about a 50-50 chance of the economy shrinking in the first quarter of this year. Other economic indicators, such as a rise in consumer debt and the yield curve inversion that’s typically a precursor to a recession, are also causing concern.
Whether you’re worried about a recession or just want to ensure your finances are as strong as possible, there are several smart steps you can take. These include having an emergency fund, staying within your budget and ensuring you have multiple sources of income. Also, it’s important to understand that just because something is “safe” to invest in doesn’t mean it will hold up during a recession, as even the most popular assets can decline. Getting in touch with your emotions can help you stay grounded during difficult times, and putting some thought into the big picture can help you make good financial decisions.
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