It's not just intuition. The forecast market currently estimates that the chances of a 2025 recession have increased by 30 percentage points since the beginning of Trump 2.0.
President Trump's chaotic tariff campaign has brought financial markets into tailings, trampling on consumer confidence and exacerbating recession problems. Together with the threat of an active trade war, the economic chaos caused by “making America rich again” is far better than convictions.
When families see their investments drop, high prices and fear of layoffs, their spending tends to decrease. When businesses are uncertain where the market is going, they tend to reduce costs and delay hiring. These factors alone will drive the economic slowdown.
Financial uncertainty could become a self-fulfilling prophecy, said Shang Saavedra, founder and CEO of personal financial education platform Save My Cents.
The prospect of a recession is correct to cause anxiety and stress. Still, the economic downturn is not an abnormality. Modern capitalism has historic boom and bust cycles. Since the mid-20th century, the United States has experienced a decline of about every 5 to 7 years, with an average length of 11 months.
The final U.S. recession began with the 19020 common recession in March 2020. By April, more than 16 million jobs had lost their jobs. Federal policymakers have taken relief and recovery measures to alleviate the hardship and stimulate economic recovery. The pandemic recession was the deepest but shortest post-World War II era.
Since then, the economy has grown very much and many experts say we want to reset it. “This is definitely not ifbut when The next recession is. ” Savedra said.
Looking back on past recessions can help us understand the problems we face and allow us to take positive action on monetary decision-making. This means checking in with our financial plan and figuring out what we need to do to keep track of it.
5 Ways to Protect Your Money Amid Recession
Here are five steps experts say you can now take action in a turbulent economy to protect your money.
1. Prepare, don't panic
Even if the economy is a mess, the recession has not officially hit. Most of us still have time to assess our financial situation and make plans before the stress of a downturn becomes terrible.
Currently, focus on building realistic safeguards and strengthening your financial foundation. Consider the specific steps you will take when you lose your job. Contributing to emergency funds and managing your debt levels now can provide a buffer for the potential financial shocks of the recession.
Uncertainty can lead to impulsive actions, such as selling investments at a loss, which may cause you to back down in the long run. “Fear shrinks our focus and limits our cognitive abilities, so it’s important to be prepared now,” said Lisa Countryman-Quiroz, CEO of JVS Bay Area, a workforce development nonprofit.
2. Cash in stock
Cash is the key to the recession. If you lose your job or reduce your working hours, you need to be able to pay your monthly bill without relying on a credit card or immersion in a retirement account.
Experts recommend having an emergency fund that will allow you to pay for three to six months of living expenses. To determine the amount that makes you feel safe in your financial situation, consider your current income and job stability; your monthly expenses (housing, medical expenses, groceries, utilities); and your future plans (expand everyone, move, take care of loved ones).
Prepare, adjust your budget and avoid excessively extending your financial position through unnecessary expenses. Delay large purchases, such as vacation or home purchase, and try calling your bill (utilities, wired, car insurance, etc.) to see if they have any discounts or promotions.
Expert tips: The best place to ensure an emergency fund is that you have access to an account that ensures your funds are secure. Saavedra recommends using a high yield savings account because it is liquid and provides reliable returns on your balance. Money Market Account and Certificate of Deposit (CD) can also be an option.
3. Start job search before you need it
When mass layoffs occur during recession, it can take several months to find a new job. Last year, it took an average of eight months for job seekers to get a job before talking about the recession that had even dominated the headlines.
Countryman-Quiroz said that part of building a financial safety net involves planning before unemployment. But preparing a resume is only the first step. A positive network to expand your professional connections can also open doors for new opportunities.
More importantly, try to do 30 minutes a week for 30 minutes to focus on building new skills to help you stand out. Doing this preparation while hiring can help you more easily transform into a new role or industry.
“It doesn’t matter where you are in your career or in the workforce, it’s crucial that you have the skills around technology (especially AI) – critical thinking, collaboration and communication,” Countryman-Quiroz said.
Expert tips: Looking for side noise or freelancers can provide supplementary income and provide protection for potential job losses or reduced working hours.
4. Take measurement methods to invest
Although the market decline is unsettling, you don’t always need to overhaul your investment strategy. The history of the stock market is to recover from decline and grow over time. Selling at sale usually means missing recovery.
For most people, it’s better to keep the course than to make a huge change: stick to the investment that is comfortable for you and keep investing.
“If you retire for at least five years, it's not the time to panic,” Savedra said. That said, if you're going to retire, it might be worth considering a safer investment. If you need more balance and less risk, money market funds or CDs may be a good choice.
5. Priority to debt
During the recession, debt becomes even more burdensome, especially if you have a high interest rate day credit card balance swallowed up with your own income. If inflation remains high or increases, these APRs will only become more painful.
You don't need 100% of your debt to survive the recession. The goal is to alleviate your financial vulnerability, not to exhaust your savings.
Before you settle your debt, Saavedra recommends keeping your living expenses for at least one month in your emergency fund. Then first pay the debt at the highest interest rate (more than 10%) so that you can pay the minimum interest.
If you are juggling several high interest debts (medical bills, credit cards, etc.), you may also consider a debt consolidation loan that combines these debts into a single personal loan and provides a fixed monthly payment.
Another strategy is to move your credit card debt to a transfer card with a balance of 0% APR starter card, which gives you some breathing space to avoid 12 to 24 months of interest charges. After the introductory period, the card's regular APR starts to start, so you need a plan to pay off what's left.
Navigate the uncertain financial future
Recession is not new. The economy often cycles during periods of growth and decline. This has not reduced the economic downturn. But all we can do is try to protect our finances and protect the property we own. It is much easier to plan through.
