Many experts believe a recession may be on the horizon this year. A recession is traditionally defined as two consecutive quarters of declining economic growth, which is measured by a drop in gross domestic product (GDP), a measure of the country’s output in the value of goods and services.
However, according to a New York Times report on January 26, 2023, the U.S. economy finished 2022 with positive GDP, new government data shows. From October to December, the GDP climbed at a 2.9% annualized pace. But economic risks still loom, and as the Federal Reserve raises interest rates to curb inflation, it may also be putting the brakes on growth.
Based on a published survey by Morning Consult on January 23, 2023, 46% of American adults believe the country is currently in a recession, while 25% anticipate one in the next year. Amanda Snyder, a finance reporter for Morning Consult, stated that although the country is not officially in a recession, individuals may still feel a financial downturn if their money is not stretching as far or their income is decreasing. The survey also revealed that 31% of the 2,200 respondents surveyed have begun taking measures to prepare for a potential recession.
Experts recommend several ways to prepare for a possible recession, such as reducing spending, boosting emergency savings, and reducing debt balances. By cutting back on expenses, having more cash set aside, and paying down debt, you can help protect your budget from unexpected events and financial challenges.