The American economy has investors on edge as there have been significant factors signaling a recession. With inflation continuing to rise as well as the housing market declining with expected high unemployment, the likelihood of a recession persists and Americans may not be prepared for such economic pressure. According to a survey by The Balance, 44% of US adults claim they are not ready for a recession as they have been adapting to recent inflation. The survey also found that 92% of those surveyed are cutting back on spending to try and ensure they have enough to pay for basic necessities and important expenses.
Another survey illustrates which generation feels the most prepared in case a recession does occur in the US. Conducted on LinkedIn’s Workforce Confidence Index, the survey found that Gen Z (people aged 25 and under) feel the most prepared for a recession with millennials following behind, at second generation most prepared. Although Gen Z insists they will be least impacted, this may not be true. If unemployment is high with job cuts being prevalent, Gen Z employees would be most at risk with employers starting layoffs with newer and younger employees.
“Dr.Doom” economist, Nouriel Roubini, claims that the world is in a ‘slow-motion train wreck’ indicating that a US recession is a sure thing next year. He warns that a mix of inflation, artificial intelligence, climate change and the risk of a World War III all stand to have enormous global impact which will significantly affect the US economy. Roubini also highlighted the Federal Reserve missing the mark on inflation, claiming that the result of the US central bank’s aggressive interest-rate increases contribute to the likeness of a recession. In addition to Roubini’s claims, a Bloomberg survey reveals that many economists follow similar standpoints. The survey illustrates that economists believe there is a 7-in-10 likelihood the US economy will sink into a recession next year in the wake of massive interest-rate hikes by the Fed.
Taking Advantage of a Recession?
Financial downturns can also be a potential opportunity for investors who are in a position to take advantage of it. The major decline in the stock markets allows long term investors to capitalize off of steady falling prices, gaining stocks for low costs.
Additionally, the cost to diversify your portfolio by picking up inexpensive dividends and index funds is also very low. If you’re in a financially sound position to do so; a recession allows investors to take advantage of a collapsing economy. Are you one to invest, or one to hide your money during a recession?