Woman on her back pushing a shopping cart in a supermarket aisle
David Espejo | Getty Images
Experts weigh the probabilities in terms of how likely a recession is and how quickly it can happen.
Most Americans — 70% — already believe an economic downturn is on its way, according to a new survey by MagnifyMoney. The survey was conducted online between June 10 and 14 and included 2,082 respondents.
A recession is defined as a significant economic downturn lasting more than a few months.
The biggest warning sign of economic recession, pointed out by 88% of respondents, is rising inflation.
Survey respondents also reported seeing signs of an economic downturn in home prices and rents, at 61%. Interest rates rise 56%. stock market 55%; decrease in consumer spending 42%; A high unemployment rate of 36%.
Some of these perceptions may be based on how people feel about the economy, rather than fixed numbers. While the US economy still has bright spots — including a generally strong job market and rising wages — higher prices have made Americans more financially insecure, according to Matt Schulze, senior credit analyst at LendingTree, which owns MagnifyMoney.
“When something so basic to people’s daily lives goes up like gas prices and grocery bills, it has a huge impact on the way people look at things,” Schulz said.
New inflation data expected to be ‘too high’
The upcoming inflation data may increase consumer sentiments.
The Consumer Price Index, which measures the average change in prices over time for certain goods and services, rose 8.6% in May from the previous year, the highest increase since 1981.
New data for June is due on Wednesday.
“We expect the headline figure, which includes gas and food, to be very high, mainly due to higher gas prices in June,” White House Press Secretary Karen-Jean-Pierre said during a briefing on Monday.
However, those June numbers are already outdated because energy prices have since fallen dramatically, she said.
“The president’s first economic priority is tackling inflation,” Jean-Pierre said. “Looking forward, there are a number of reasons why we can expect these higher prices to come down over the coming months.”
What do people do to prepare for a recession?
The biggest concern people mentioned about the looming recession is the inability to pay their bills, at 44%, according to a MagnifyMoney survey.
In order to prepare for an economic downturn, many focus on keeping their spending aligned – 62% of respondents said they are cutting back on spending, while 39% are sticking to the budget. Experts say these steps can be important in the event of a job loss or other financial setback. Others are building emergency savings at 26%.
MagnifyMoney participants also report that they have taken steps to support their income streams, with 24% working on a side gig and 6% to improve job performance. Another 6% reported adjusting their investment portfolios.
Meanwhile, 11% of respondents said they do nothing.
Debt reduction could have a ‘significant’ effect
There are proactive steps individuals can take now to put themselves in a better financial position, according to Schultz.
One in four MagnifyMoney survey respondents reported paying off debt as a way to prepare their finances for the economic downturn. With the Federal Reserve raising interest rates, he said, people may want to consider their options to control personal interest rates on their debt.
More personal finance:
65% of Americans who earn $100,000 or more are very concerned about inflation
5 steps you can take now to prepare financially for a recession
3 ways to deal with inflation, price hikes and your credit
For those with good credit, a 0% transfer credit card can be “very useful,” Schulz said.
For those without good credit, a low-interest personal loan may help reduce the interest you pay on your balances.
By contacting the issuer for an existing credit card, you may be able to negotiate a lower rate. And that worked for about 70% of people who ordered it in the past year, according to Schultz.
“Any of those moves could lower your rates significantly more than the amount the Fed is raising on a monthly basis, so it could be something really important,” Schulz said.