Mix a pandemic, quarantined consumers increasing savings, supply chain bottlenecks, and a government intent on pumping money into the economy to prevent it from collapsing. You have a recipe for inflation. Garnish with a Russian-Ukraine war for extra fluffiness.
Gas, groceries, transportation, and housing are being paid for at a premium, and some Americans have difficulty keeping up. To help combat this, the Fed is running through its fastest series of rate hikes since the late 1980s—and has no immediate plans to slow down. Federal Reserve Chair Jerome H. Powell clarified that there would need to be some trade-offs to bring inflation down to 2% in a press conference in late September. “We’re never going to say that too many people are working”.
If our projections are close to right, you’ll see that the unemployment costs are meaningful, and they’re certainly important to the people who lose their jobs.” To tackle inflation; the economy has to slow, which includes a “softening labor market.”
Jamie Dimon, chief executive officer of JPMorgan Chase, warns the US economy will lose 175,000 jobs per month. President Biden says that is not the case, as Dimon predicted.
An analysis from Goldman Sachs places the US at an increased risk of recession over the next two years. As the Fed continues to raise interest rates, the chances of a recession also increase. What are some things you can do to prepare?
Sybil Ludington, “It’s Like Déjà vu All Over Again.” Yogi Berra
1. As interest rates climb, this will affect variable interest rate credit cards. If you carry a balance monthly, you’ll be paying more to borrow. Start paying these cards down sooner than later.
2. Save some money in a high-yield savings account. Now may be a good time to beef up your savings to help mitigate emergencies or potential job losses.
3. Keep your licenses and certifications active. Maintain those professional connections and relationships. Keep your resume updated with any new responsibilities or projects you take on at work.
4. Stay invested. Now is not the time to pull out of the market. When the market eventually returns, Dollar Cost Averaging will make much more sense.
Whether you believe a recession is underway, it doesn’t hurt to prepare yourself.
Photo Courtesy Benito Cereno.
Mariah is a native Floridian. She is a graduate of Piper High School. Mariah is a Florida Atlantic University Alumna and has degrees in Health Management and Health Services.