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Financial experts spent much of 2022 warning of a 2023 recession. In spite of that, unemployment is low and job growth has persisted.
But things have the potential to change for the worse during the latter half of the year. And Goldman Sachs CEO David Solomon thinks it wouldn’t hurt for Americans to be a bit cautious right now.
Although Solomon isn’t necessarily saying a full-blown recession will hit, he does think that in the coming months, consumers may be forced to grapple with “sluggish growth and sticky inflation.” And that’s hardly ideal.
Inflation has been wreaking havoc on consumers since mid-2021. And consumers, frankly, need a break.
A recession, or recession-like downturn, could help break the cycle of inflation. But that’s something consumers should make certain they’re prepared for. Here’s how.
1. Build up some savings
The danger of a recession is that it can lead to widespread job loss. To protect yourself from that sort of situation, your best bet is to build up a solid emergency fund so you have cash reserves to tap in the absence of a paycheck.
At a minimum, your goal should be to have enough money in your savings account to cover three full months of essential bills. And if you can aim higher, even better.
It can be difficult to find a new job even when economic conditions are favorable. During a recession, finding work can be a challenge even among seasoned professionals with solid skills. So the more savings you have to tap, the less pressure there is to immediately find a job in the event of a layoff.
2. Pay off costly debt
If a recession strikes, the last thing you’ll want is to have monthly credit card payments hanging over your head. So if you’re currency juggling debt, consider getting a temporary side gig to pay as much of it off as you can. Given that interest rates are sky-high these days, shedding a credit card balance sooner is a savvy move even without recession fears.
3. Boost your job skills
The more work-related skills you have, the harder it might be for your employer to let you go should job cuts become necessary. And even if you are terminated through no fault of your own, having extra skills could make it easier to find a new job should that need arise.
Think about some of the skills that might make you better at your current job and more marketable within your industry. If you work in advertising, for example, boosting your public speaking skills might be beneficial to your career.
Solomon is far from the only expert to caution that economic conditions could worsen later on in 2023 or in 2024. Rather than lose sleep over the idea of a downturn, take steps to make sure you’re adequately prepared. That means growing your savings, shedding expensive debt, and doing your best to present yourself as a skilled, knowledgeable employee any company would be lucky to have on its team.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.
