Hardly a day goes by without some economist raising his or her recession odds. Currently, most of the worry centers around the impact that tariffs may have on growth. If foreign governments respond to US tariffs with their own increases, it could slow economic growth or even cause it to shrink. That would lead to a rise in unemployment as companies cut back on hiring and production.
A variety of economic measures have been flashing warning signs, including declining stock prices and weakening consumer sentiment. Another concern is rising interest rates, which can trigger a recession if they make it harder to pay off mortgages, credit card debt and other kinds of loans. That could also hurt the housing market and lead to more foreclosures.
While the chances of a recession are still fairly low, it’s important to have your financial ducks in a row just in case. A good place to start is by making sure you have an emergency fund that can cover unexpected expenses. Another step is to budget carefully, so you spend less than you bring in each month. That will help ensure you can survive a downturn without running up big credit card balances that you’ll have to pay off later. Having cash on hand is also helpful, as it reduces your dependence on credit availability when things get tough. You can also use it to cushion the blow if you do lose your job or need to cut costs for any reason.
About the Author
