- There is talk of the possibility of an economic recession in 2023.
- Although the feared recession has not yet occurred, experts remain cautious.
- Here’s how you too can prepare.
Shoppers in Chicago’s Magnificent Mile shopping district on August 15, 2023.
Jamie Kelter Davis | Bloomberg | Getty Images
A recession is predicted for most of 2023.
However, a recession, officially defined as two consecutive quarters of decline in GDP growth, has not yet occurred.
“It’s clear there’s going to be a recession at some point,” said Jack Manley, global market strategist at JPMorgan Asset Management. “But the timing is not set in stone.”
Most economists (61%) think there is less than a 50% chance of a recession occurring within the next 12 months. Latest report According to the National Business Economics Association, released this week.
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However, the survey found that 39% of respondents believe there is a 50% or more risk of a full-scale recession occurring within that time frame. Half of those expecting a recession said they expected it to start in the first quarter.
“We still expect the economy to slow significantly and slip into recession in the first two quarters of next year,” said Eugenio Aleman, chief economist at Raymond James.
Aleman said the outlook is based on the expectation that the housing market may face stress while consumers may hold back on spending. Additionally, new conflicts in the Middle East could impact both oil prices and supply chains.
Alleman said these factors could keep the Federal Reserve’s interest rates higher for an extended period of time.
Manley cited negative headlines, including the autoworkers strike, the impending federal government shutdown temporarily averted, uncertainty surrounding the Federal Reserve, and broader geopolitical issues. He said the possibility of a setback has been steadily increasing in recent months.
Those concerns could cause consumers to hold back during the busiest spending time of the year, Manley said.
“Our confidence has been shattered by all these bad headlines and this wall of fear,” Manley said.
“They may not spend as much as they probably had planned before all these bad headlines,” he said.
A recession will obviously occur at some point. However, the timing has not been determined.
jack manley
Global Market Strategist at JPMorgan Asset Management
Research shows that for many consumers, rising prices are making it feel like a recession is already here.
Whether a recession comes or not, these are important tips for financial advisors to help you prepare now.
Most of how a recession affects you depends on whether you still have a job, says a certified financial planner. Glassman Wealth Serviceshe told CNBC.com earlier this year. Mr. Glassman is also a member of CNBC’s Financial Advisor Council.
He noted that an economic downturn could create a situation where even those who are still employed have reduced incomes.
Therefore, it is a good idea to assess how well you can cope with a decrease in income. If you lose your job, think about how long you can keep up with your bills based on your savings and other available resources.
“Stress test your income against ongoing obligations,” says Glassman. “Make sure you have some kind of safety net.”
Employment growth was particularly strong in September, according to the latest government data.
Akin Bostansi | E+ | Getty Images
Setting aside just a little extra cash can help prevent unexpected events like car repairs or unexpected bills from denting your budget.
But research shows that many Americans would have a hard time covering a $400 expense with cash.
Experts say the key is to automate your savings so the money isn’t coming into your paycheck.
“That’s why you should save, even if you get through this period relatively unscathed,” Mark Hamrick, senior economic analyst at Bankrate, recently told CNBC.com.
“I have yet to meet anyone who saved too much money,” he added.
Another benefit of saving now: Rising interest rates mean the potential return on that money is the highest it’s been in 15 years.
You’re not alone in having credit card debt.
In the second quarter, the balance exceeded $1 trillion for the first time.
Matt Schultz, LendingTree’s chief credit analyst, previously told CNBC.com that rising interest rates are increasing debt payments, but you can control them by paying down your balance. .
“It’s very worrying for people to see inflation rise this quickly,” Schultz said.
But certain moves could help control interest rates for individuals, he said.
If you carry a balance on your credit card each month, try to reduce the cost you’re paying on that debt with a 0% balance transfer offer or a personal loan.
Alternatively, you can ask your current credit card company to lower your interest rate.
Concerns about an economic downturn and market turmoil could present an opportunity for investors willing to take risks, said Camilla Elliott, co-founder and CEO of CFP. collective wealth partners In Atlanta.
Elliott, a member of the CNBC Advisory Council, says if you’re five years away from retirement or approaching it, now is the time to consult a trusted financial planner to make sure you’re on track. Ta. earlier this year.
For those still a long way from retirement, whose goal is 10 to 30 years from now, now may be a time to take more risks because they have time to ride out market fluctuations, Elliott said.
Average market returns tend to bounce back, which can lead to meaningful progress over time.
Elliott said the quote reminded him of a famous quote by legendary investor Warren Buffett. “Be fearful when others are greedy, and be greedy when others are afraid.”
“We look at investments based on that philosophy whenever there’s fear or risk, but often there’s also opportunity,” Elliott said.
Join us on October 12th for CNBC’s Financial Advisor Summit. We speak with top advisors, investors, market experts, technologists, and economists about what advisors can do now to deliver the best outcomes for their clients as we head into the final quarter of 2016. In 2023, he faces the unknown in 2024.details and get your ticket today.
