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Talks about a looming recession have been circulating headlines for months, with no clear answer as to what Americans can expect. While some economists don’t see a global recession happening anytime soon , other top finance execs have predicted everything from a recession by the end of this year to a 50-50 chance of a recession next year to a “mild” recession come 2024 . JPMorgan Chase CEO Jamie Dimon sparked a cause for alarm last week when he warned of an economic “hurricane.”
One thing we know for certain is that today’s record-high inflationary environment — and, in turn, the Federal Reserve’s swift tightening — is a key factor contributing to a potential economic downturn. Historically, recessions have typically followed the Fed raising interest rates to combat high inflation.
Though there are a number of other recession indicators to consider in the bigger picture, such as rising unemployment, it’s no doubt that recession fears are leaving many Americans feeling uncertain about their financial futures. In fact, a recent CNBC All-America Workforce Survey found that 83% of employed adults are worried about a recession, making it the biggest near-term concern and beating out worry over wages (74%), Covid (62%), pay cuts (46%) and layoffs (44%).
Since a recession is technically defined as two consecutive quarters of declining gross domestic product, or GDP, we won’t know for sure until the numbers are reported in July — keep in mind, however, economic flows such as this are inevitable.
In the meantime, experts advise that it’s never a bad idea to check in with your money habits to set yourself up to be in the most secure financial position possible. You can stress less about what happens with the economy knowing that you have built the most stable foundation you could.
“I’ve always maintained the stance that people spend way too much time trying to predict the market, interest rates and where the economy is going and way too little time managing their money,” says Clark Kendall , certified financial planner, president and CEO at wealth management firm Kendall Capital .
Here are six smart financial steps to take right now.
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Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here . 1. Make your dollars go further
As the cost of money gets more expensive, consumers are put in the position to figure out how to best spend their limited dollars.
In this vein, Dan Varroney , founder of consulting firm Potomac Core and expert on economic performance, speaks directly to rising gas prices . With the national average, at the time of writing, being close to $5 per gallon, he advises that whenever possible, people should utilize mass transportation, carpooling or walking. Otherwise, “make every driving trip count,” he says. This could entail combining trips with multiple stops and shopping locally to save on gas and time in the long run.
Apps such as GasBuddy can help you hunt down the cheapest gas prices near you. GasBuddy also has a rewards card that connects to your bank account and offers up to 25 cents off a gallon — it’s not a credit card and won’t affect your credit score.
If gas is a big spending category for you, try to use a gas rewards credit card that’ll reward you for your purchases. With the Citi Custom Cash℠ Card , cardholders get 5% cash back on their highest eligible spend category for each billing cycle — which can include gas — on up to $500 worth of purchases in that category. This means big gas spenders can earn up to $25 back per billing cycle. 2. Take another look at your spending
If you’re feeling cash-strapped right now, it’s worth seeing where you can eliminate any discretionary costs — in other words, expenses outside the necessities of things such as rent, food and utilities.
Howard Dvorkin of Debt.com recommends looking at recurring charges such as unused gym memberships or subscriptions. He cites a 2021 Chase survey that found that two-thirds of consumers have forgotten about at least one recurring payment within the last year and more than 70% of consumers estimate wasting over $50 each month on recurring payments for things they no longer need.
“I can’t tell you […]
source 6 money moves to make when you’re worried about a recession