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A Look At The Coming Recession And Surviving The Rough Patch

The market crashes, investors are spooked, and inflation continues to rise as gas prices break records. How to survive in this new world.

By Jason Ray Morton Published 2 years ago 5 min read
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A Look At The Coming Recession And Surviving The Rough Patch
Photo by Aditya Vyas on Unsplash

The realities about our economy may have people worrying, having sleepless nights, and generally stressed. As gas and energy prices remain out of control and prices of food and other consumer items skyrocket, the economic news is constantly grim.

Today’s Economic News

The markets crashing again comes as no surprise as May inflation was reported, showing the raises in interest have had little effect on inflation. According to five different sources, inflation for May was 8.6% on June 10th, 2022. Shortly after the report on Mays inflation rate, there was a 700-point fall in the Dow as investor concerns peaked, worrying about an economic downturn and another increase in interest rates by the Federal Reserve.

The Federal Reserve announced in April that it was considering raising the interest rates to control inflation. The Federal Reserve will likely announce a half-percent interest rate hike next week. After hearing the report, the central bank could consider a more aggressive rate hike.

April 2022 Inflation-8.3%

May 2022 Inflation-8.6%

“We think the US central bank now has good reason to surprise markets by hiking more aggressively than expected in June.”

— Barclays analysts

“The major risk to consumption, employment, and the economy overall, isn’t a growth slowdown, but the extent to which extreme energy/food price increases could cause central banks to push (ineffectually) against the string, and the economy could essentially fall into a damaging policy mistake.”

— Rick Rieder, CIO Global Fixed Income BlackRock

Inflation is now at a new 41-year high. The Federal Reserve’s plan to raise the interest rates to combat inflation is slow going, not showing signs of being effective. Initially, the concerns that the Reserve would use interest rate hikes to push us into a recession so that there could be a soft reset of the economy were enough to have people concerned. Raising interest rates will slow down lending and there won’t be as much money out there for investors and developers to borrow.

While the Fed attempts to negotiate a soft reset of the US economic situation and bring us down to a 3% or lower inflationary rate, what should the average person be doing to prepare for the worse?

Image by Christos Giakkas from Pixabay

Preparation

Some experts are predicting that the United States is sliding into a recession, or one has begun, and we are only starting to feel the effects. Whether it’s here or whether it’s still coming our way, one thing seems certain. A recession is something we are going to have to weather through.

If you haven’t started to prepare for the worst, start as soon as possible. We can hope for the best but hope is only going to get us so far. So, here are some suggestions to prepare yourself and your families for the ugliness to come.

Create a Financial Strategy

Our lives are controlled by money. When we’re stressed about finances, our lives and health suffer. Getting on top of your finances today will help you keep the other important areas of your life in control.

Put together a spending plan. You have to have a budget and stick to it as close as possible until you have a large enough nest egg to help weather the recession.

Savings and investing strategy. From the Washingtons to the Benjamins, every little bit counts.

Finding ways to earn more money. Whether it’s freelance writing, starting a blog, selling online, flipping products, creating an online course, or finding a part-time job, growing your income will help to weather the economic storms.

Live A Frugal Life

To achieve and maintain financial stability, spending frugally is a big part of the equation. Start by tracking your usual expenses and then look for areas you can cut spending. Commit to meal planning and cut down on eating out, curb unnecessary shopping, and terminate subscriptions you no longer use or can do without.

Develop A Savings Cushion

The Federal Reserve issued a 2019 report that found nearly 40 percent of Americans wouldn’t be able to cover an unexpected $500.00 expense. If you don’t have an emergency fund, start one so you have extra money even if you’re laid off. Make your first goal $1,000 and then aim for a minimum of 3 months of regular income.

Photo by Firmbee.com on Unsplash

Minimalize Excess You Don’t Need

We’ve all got items in storage somewhere, clothes that are like-new and unused, or perhaps collectibles that are no longer wanted. Start selling on eBay, through social media, pawn brokers, and consignment shops, and use the money toward paying down big bills and establishing the nest egg you don’t have.

Prioritize and Pay Down Debt

Snowball your debt pay-off plan. It allows you to focus on the smallest debts first, working from smallest to largest, metaphorically resembling a snowball's start from its’ hand-sized beginning to a boulder. There are spreadsheets to help you keep records of your progress as you put together and carry out your plan.

What To Expect From Here

Of all the things that we are hearing about the current state of inflation and the U.S. economic outlook, the rise in gas prices contributing to the problems makes the most sense. When gas prices rise, distributors of consumer goods are going to raise the prices to cover the cost of shipping. Many of the drastic rises in prices are attributable to the price at the pump.

Some counties in California are already grappling with prices higher than $6.00 a gallon, and $7.00 isn’t far away. Last week, in a research note issued by analysts at JPMorgan, they predicted if strong consumer demand continues during this time of the lowest supply in three years, average prices likely would be $6.20 by Labor Day.

Final Thoughts On A Recession

With gas prices double what they were in 2020 we’re seeing an unprecedented level of inflation for most of our lifetimes. As our leaders continue to fail to bring things under control, it’s up to us to figure out a way to survive over the long term. However, there are the basic steps that we can all take to help survive and perhaps even thrive through the coming year or two before things get better.

Good luck and if you have suggestions on preparing for the recession, please leave them in the comments.

finance
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About the Creator

Jason Ray Morton

I have always enjoyed writing and exploring new ideas, new beliefs, and the dreams that rattle around inside my head. I have enjoyed the current state of science, human progress, fantasy and existence and write about them when I can.

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