In the past year, economists have repeatedly predicted a recession in the U.S. The economy, however, has proven to be extremely resilient. Despite sometimes being shaky, the economy has repeatedly defied predictions of a downturn. As a result, economists continue to delay the onset of a recession.
However, Wolters Kluwer Blue Chip Economic Indicators say there’s a 61% chance of a mild recession this year.
According to Dave Meltzer, Co-Founder of Sports 1 Marketing and best-selling author, no matter what you call the current economic climate, it’s irrelevant. In the economy, we are always looking for accelerated changes based on career and job opportunities. When we recognize where accelerated changes are occurring regardless of what we define as the economy, we find great opportunities.
The first step is to analyze the markets to determine which markets are accelerating and where there is overselling and overbuying. Overselling and overbuying create opportunities when these two indices are high or low. Making money with this application is very easy. To be ready for accelerated change, Meltzer always recommends studying the markets.
Second, find out who are the market makers. For example, in 2008, it was subprime lenders who were driving the markets.
Additionally, we need to take a look at the margins. This is the easiest of all, but often the most overlooked. When a market undergoes rapid change, people often forget to make a profit. Why? They become so overwhelmed by worrying and working that they forget that this is an industry, career, or job that is oversold or overbought. But, if we position ourselves as a market maker in the right market, we can make a ton of money.
What Can You Do to Prepare for a Recession?
Even if we currently aren’t in a recession, here are some things you can do to prepare for a recession:
- Review your budget and make adjustments. Analyze your spending and identify areas for savings. If you want to save money, you may need to cancel subscriptions, eat out less, or do something else.
- Build an emergency fund. In a recession, this is your most important financial precaution. It is recommended that you have a sufficient emergency fund to cover your essential expenses for 3-6 months in case of an emergency.
- Increase your savings. During a recession, it’s a good idea to increase your savings, regardless of whether you’re saving for retirement. In the event of a loss of employment or a reduction in income, this cushion will provide you with some financial security.
- Pay down debt. Credit card debt, such as those incurred during a recession, can be very burdensome financially. It would be best if you were able to pay the debt off as soon as you can.
- Consider your investments. By investing in more conservative assets, you may reduce the risk of your stock market investments. It is best to look for companies that have consistent revenue and earnings growth during a recession. The financial position of these companies tends to be stronger, which makes them more resilient to economic downturns.
- Review your insurance policies. If you lose your job, require medical care, or suffer any other unexpected event, make sure you have adequate insurance coverage.
- Stay informed. Prepare yourself for any changes by keeping an eye on the news and economic indicators.
In a recession, you should avoid the following:
- Panicking. A recession can make you anxious, but you should stay calm and make rational decisions.
- Making any major financial decisions. Before making any major purchases or investments, wait for the economy to stabilize.
- Increasing your debt. Debt is the worst thing you can do at this time.
- Quitting your job until later. During a recession, keep your job if you can. You will be able to maintain your income and credit score if you do this.
- Listening to broke influencers. Instead of trying to keep up with people who post pictures of themselves in the front of the jet, car, or house, they don’t own, live and apply your why, advises Dave. To put it another way, know what’s important to you. As well as helping you become more aware of your happiness, health, wealth, and worth, this is a powerful antidote to procrastination and feeling overwhelmed.
By taking these steps, you can help protect yourself and your finances in the event of a recession. And, even if we’re not in recession the tips above can be used to improve your finanical situation.
Use Slumps to Your Advantage
“A slump is the universe’s way of strengthening you for what’s coming — the better side of things,” Dave wrote in Entrepreneur. And, yes, that includes recessions.
The good news? There are ways to take advantage of any type of financial downturn.
The typical slump is divided into four stages: prosperity, recession, depression, and recovery. “We see lots of success before it begins to diminish, putting us into a hole that is tough to get out of without the right perspective,” Dave explains.
It only takes seconds or minutes to recover from recession and depression if you have the right mindset, he adds. Consider it as the universe preparing us for a better future.
Plateau and grow.
It’s better to focus on personal and professional growth rather than worrying about productivity dips in your life, Dave recommends.
The struggle is real (important).
During times of recession and depression, a butterfly’s struggle is what helps it fly. Whenever you find yourself in a rut, choose to see it positively. Make the most of the challenges you face by taking motivation and inspiration from them.
Take responsibility for your actions. Take time to be grateful. And, get ready to fly.
Don’t dwell in depression.
Essentially, pursue your potential consistently and persistently, he states. Make sure you don’t let difficult times hold you back.
Rather than waiting for things to change, take action. Become the change you want to see.
The struggle becomes inspiration.
Turn your slumps into motivation and inspiration. You will never get out of a rut by wallowing in despair, Dave adds. If you want to change your current reality, you need to take action.
There is no way to tell for certain whether we are in a recession because the economy is a complex system. It is possible, however, that we may be heading towards one based on the factors listed above.
In the event of a recession, you should start planning ahead now if your economic situation is uncertain. In order to protect yourself and your finances, you should follow the steps outlined above.
Are we currently in a recession?
As of this July 2023, the U.S. economy is not officially in a recession yet. There are, however, some signs pointing toward a recession. Among them are:
- A cooling is occurring in the housing market. Mortgage rates are rising, and home prices are declining.
- In addition to high rates dampening business capital spending, manufacturing activity has declined for seven straight months.
Contrary to expectations, consumer spending, which accounts for 70% of GDP in April, grew by 0.5% after inflation was adjusted. In turn, the economy has remained strong with a monthly average job creation of 283,000 jobs between March and May in the public and private sectors.
In the event of a recession, it will likely be mild. However, a recession would still affect the economy negatively, and job losses and unemployment are likely to result.
What happens during a recession?
A recession causes businesses to struggle to make profits, which in turn leads to job losses and layoffs. Recessions tend to result in significant increases in unemployment rates as well. In addition, stock market returns tend to drop during a recession.
Additionally, as consumers become more cautious with their money in a recession, they also tend to reduce their spending. As a result, economic growth may slow further.
How long do recessions last?
There is no set length for a recession. A few short recessions have occurred in the past, lasting a few months at most. There have also been longer periods, lasting for years.
What can I do to prepare for a recession?
In order to prepare for a recession, here are a few things you can do:
- Build up your savings. In the event that you lose your job or your income dwindles, you will be able to weather the storm with a financial cushion.
- Pay down debt. When your debt load is reduced, you’ll have more money available for savings or investment.
- Review your budget. Ensure that your budget is in good shape and that you are not spending more than you are earning.
- Be prepared to make changes. It may be necessary to cut back on spending if a recession occurs.
- Update your resume and start networking. In case of a recession, updating your resume and networking with people in your industry is a good idea. By doing so, you can stay connected and be ready if you need to find a new job.
- Learn new skills. In case you need to change jobs, this will help you be more marketable.
An economic recession does not spell doom for the world. In the past, the economy has always recovered from recessions, and it is likely to do so again. Nevertheless, it is important to be prepared for recession-related challenges.