It was only a matter of weeks before the COVID-19 epidemic made landfall in the United States, triggering an unparalleled unemployment crisis that pulled millions of Americans out of the job. The economic situation deteriorated to the point where politicians were forced to act fast to provide assistance in the form of stimulus checks and other provisions, such as eviction moratoriums.
Fast forward two years and the economy is in a much healthier state than it was in March 2020, which is a welcome development. Not only is the labor market bursting at the seams with opportunities, but demand for consumer products is also high, as indicated by recent increases in inflation.
Despite this, it appears that a large number of individuals are concerned that things may be about to get worse. According to a recent Nationwide survey, 70 percent of female investors are anxious about the possibility of an economic recession occurring within the next 12 months. But are such anxieties well-founded — or are they completely irrational?
Uncertainty Reigns in the World.
At the moment, there are numerous reasons for investors, in particular, to be on the edge of their seats. Since January, the stock market has been extremely volatile, and international tensions are making a lot of people concerned about the potential impact on the economy as a whole.
However, it’s worth noting that the survey was conducted in late 2021, indicating that these circumstances did not play a part in respondents’ expectations. As a result, predictions of a near-term recession could be mostly a byproduct of the generally difficult times in which we have all been living.
Does this imply that 70 percent of female investors are incorrect in their concerns about a recession? This is not always the case. In the absence of a crystal ball, it is impossible to forecast when economic conditions may deteriorate suddenly and dramatically. There is also no reason to believe that a recession is imminent, as evidenced by recent developments.
While this is the case, it would behoove you to take precautionary measures to prepare for one. And it’s possible that doing so will provide you with much-needed peace of mind.
Getting Ready for a Recession
Even if you don’t believe a recession is impending, it’s a good idea to be prepared in case one does occur, just in case. One of the most effective strategies to do so is to accumulate a substantial emergency fund, one that contains enough funds to cover three to six months’ worth of necessary living expenditures. In this way, if you were to lose your work or experience a reduction in income, you would still have some cash reserves to fall back on.
It’s also a good idea to keep high-interest debt to a minimum or eliminate it totally. Determine how you will pay off any outstanding balances on your credit cards, whether it is by cutting back on spending to free up more cash or gaining additional income through a second job and put that plan into action.
And, while we’re on the subject of second jobs, while side hustles are fashionable these days, having one can provide you with some financial security in the event of a recession. If you have a second source of income available to you and you are laid off from your primary job, you will still have work — and earnings — to fall back on while you look for full-time employment.
There is no necessity to stay awake at night worrying about the possibility of a recession, but it is wise to take precautions to safeguard oneself if one does take place. Consequently, regardless of your level of concern, you may wish to make financial adjustments that will put you in a better position to weather a period of widespread economic difficulty.
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