Economic Downturn is Coming
The United States is in the longest bull market in history. The stock market has quadrupled since the first quarter of 2009. I began after the Great Recession of 2008.
With such a long sustained run up in the Dow Jones Industrial Average, many people believe a recession is coming soon. In a recent study conducted by Met Life, 51% of the 8,000 respondents believe a recession is coming in 2020(1). Many reported that they are not financially prepared for a recession.
There are some good reasons to fear another recession may be coming. Chief among these is the possible trad war with China. While negotiations continue between China and the United States, no agreement has been reached. In addition, many countries are currently in recession, including Greece, Italy, Russia, Portugal, Brazil, and Venezuela(2). If the economy contracts, job losses are inevitable.
As reported in the Met Life survey, many Americans are not prepared for an financial downturn. Only 32% of the respondents have savings to cover six months expenses. 43% report that they are living from paycheck to paycheck(3). Worse, many have not recovered from the Great Recession. People spent down their savings, increased credit card balances, and have taken out additional personal loans. As a result, their financial safety net is gone.
Now is the time to get your safety net mended. Build your emergency savings to three months of expenses immediately. Next, stop using credit cards. Use cash and debit cards so that you don't spend money than you currently have. Finally, begin paying down outstanding credit card and loan debts. The next U. S. recession may not happen tomorrow, but it may not be far away.
1 "Half of Americans think a recession is coming in the next year - and they admit they're unprepared" by Carmen Reincke MARKET INSIDER October 10, 2019.
2 "What is a Recession and Are We in One?" by Cameron Saucier MONEY MORNING February 10, 2016.
3 "Half of Americans think a recession is coming in the next year - and they admit they're unprepared" by Carmen Reincke MARKET INSIDER October 10, 2019.