With Recession Looming, How Can You Protect Yourself?

Inflation is taking off. Interest rates are rising and the economy is suffering.

Are we on the cusp of another recession? If so, what should you do to protect yourself?

“In terms of your personal finances, nothing changes when it gets that title,” said Alex Cartwright, associate economics professor at Ferris State University.

Most economists say a recession begins after two consecutive quarters of negative growth in the GDP. Others say it has two have two shrinking quarters and high unemployment. We find out in July for sure but many feel it’s inevitable. The White House disagrees.

“No, I don’t think it is,” said President Joe Biden from Delaware, “There’s nothing inevitable about a recession.”

Whether it officially gets the title or not,  it’s not a good time for the economy.

“One way or another, it’s an economic slowdown,” said Cartwright.

Cartwright said the best thing to do with a recession looming is, nothing.

“This is when we start making decisions with our hearts and not necessarily our most logical state of mind,” he said.

Stick to your investment and retirement plan. If anything, Cartwright said during high inflation, now is when to invest even more.

“The value of your cash is going down quicker than ever before,” said Cartwright, “ So you don’t need to hold large emergency funds.”

If you can afford it, the cliché ‘buy low and sell high’ reigns supreme.

“If you can just continually invest your couple hundred dollars a week or a couple hundred dollars a month, you’ll be effectively getting more shares of stock at a lower price,” said Cartwright.

This isn’t the worst time to take on debt. Money locked in an interest rate below the inflation rate can be a long term win when things recover.

“I’m not saying to go out and buy a car that you weren’t planning on but you should lean towards taking the loan on that new car,” said Cartwright, “Remember that any interest rate that is less than 8% is better than zero.”