Down Debt

70% of Americans think a recession is coming. How to prepare

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Experts assess the likelihood of a recession and how quickly it could occur.

Most Americans – 70% – already believe an economic downturn is underway, according to a new survey from MagnifyMoney. The online survey was conducted between June 10 and 14 and included 2,082 respondents.

A recession is defined as a significant economic decline that lasts longer than a few months.

The biggest harbinger of recession, which 88% of respondents pointed out, is high inflation.

Respondents also reported seeing signs of an economic slowdown in housing prices and rents, with 61%; rising interest rates, 56%; the scholarship, 55%; lower consumer spending, 42%; and rising unemployment, 36%.

Some of these perceptions may be based on what people think about the economy, rather than hard numbers. According to Matt Schulz, chief credit analyst at LendingTree, owner of MagnifyMoney, while the U.S. economy still has some bright spots, including a strong overall labor market and rising wages, rising prices have boosted sentiment. financial insecurity of Americans.

“When something as fundamental in people’s daily lives as gas prices and grocery bills skyrocket, it really has a huge impact on how people see things,” said Schulz.

New inflation data expected to be ‘very high’

Upcoming inflation data could further fuel consumer concerns.

The Consumer Price Index, which measures the average change in prices over time for certain goods and services, rose 8.6% in May from a year earlier, the biggest increase since 1981.

New data for June is expected to be released on Wednesday.

“We expect the overall figure, which includes gasoline and food, to be very high, mainly because gasoline prices were so high in June,” the House press secretary said. Blanche, Karine Jean-Pierre, during a press briefing on Monday.

However, those June numbers are already out of date because energy prices have since fallen significantly, she said.

“The president’s number one economic priority is the fight against inflation,” said Jean-Pierre. “And looking forward, there are a number of reasons why we expect these high prices to come down over the next few months.”

What people are doing to prepare for a recession

People’s biggest worry about an impending recession is the inability to pay their bills, at 44%, according to the MagnifyMoney survey.

In order to prepare for a downturn, many are focusing on controlling their spending – 62% of respondents said they were cutting spending, while 39% were sticking to a budget. These steps can be important in the event of a job loss or other financial setback, experts say. Others are building up emergency savings, with 26%.

MagnifyMoney respondents also said they had taken steps to strengthen their sources of income, with 24% working alongside and 6% improving their job performance. Another 6% said they had adjusted their investment portfolio.

Meanwhile, 11% of respondents said they were doing nothing.

Debt reduction can have a ‘significant’ effect

According to Schulz, there are proactive steps individuals can take now to put themselves in a better financial position.

One in four respondents to the MagnifyMoney survey said paying off debt as a way to prepare their finances for an economic downturn. As the Federal Reserve raises interest rates, people may want to consider their options for controlling their personal interest rates on their debts, he said.

Learn more about personal finance:
65% of Americans earning $100,000 or more are “very concerned” about inflation
5 steps you can take now to prepare financially for a recession
3 Ways to Manage Inflation, Rising Rates and Your Credit

For those with good credit, a 0% transfer credit card can be “very, very helpful,” Schulz said.

For those who don’t have good credit, a low interest personal loan can help reduce the interest you pay on your balances.

By calling a current credit card issuer, you may be able to negotiate a lower rate. It worked for about 70% of people who asked in the last year, according to Schulz.

“Any one of those moves can lower your rates by a lot more than the amount the Fed is raising them on a monthly basis, so that can be a really big thing,” Schulz said.