Tough times are ahead in Biden's economy. Here's your recession checklist
Signs that the US economy is heading into a recession are all around and it's time to prepare
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If you haven’t been paying much attention to the small army of economists droning on about the threat of a recession, that’s OK. It’s summer. It’s hot. Nobody, not even me, one of those economists, wants to dig through the mountain of boring economic data detailing things like consumer confidence and retail inventories. But the warning signs are there. Nobody can know for sure but it seems very likely that sometime before the end of the year the economy is going to get worse. Maybe much worse.
And of course, there’s nothing you can do to prevent a recession. Why worry about things you can’t change?
But remember you have more control than you might think. You can’t stop it from coming but you can prepare. What that preparation will look like for you depends on where you are in life, there is no single to-do list that makes sense for everybody. Still, as you get ready for what is likely to happen here there are three kinds of things that matter. Let’s review.
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1. Start with your job.
If you don’t have one, get one. If you do have a job, make sure you’re doing it well.
Despite all the signs showing that the economy slipping towards a recession, the jobs market is still strong. We added 372,000 new jobs in June. You have more control than ever. Employers are desperate to hire the right people. That will not last. If—or should I say when?—companies see business slip away, they will announce hiring freezes. If—or should I say when?—that isn’t enough, there will be layoffs.
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Things have been so good for so long that you might have forgotten two iron rules of work: (1) It’s easier to get a job if you have a job, and (2) your boss plays favorites.
When the recession comes, make sure you’re on the inside looking out. And once you’re on the inside make sure your boss wants to keep you around.
2. The second thing on the checklist is your money.
When it comes money, more is better. No matter how well you do your job, a recession can spell trouble. Bad things happen to good people. And even if you don’t find yourself hunting for work in a bad economy, you may lose overtime, bonuses and commissions. Unless you’re about to pay cash for a second private jet, you need an emergency reserve. When, as is now the case, the threat of an emergency grows, your cash reserves should grow too.
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I know that’s easy for me to say. Even in a strong economy not everyone can save. But most people do have options and the little things matter. Quit ordering $6 coffees, work some overtime, whatever. Just do it. There may come a time when even an extra few hundred dollars for a car repair or an electric bill will make all the difference.
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3. The final and most important thing on your recession checklist is your attitude
The pandemic taught us all important lessons about what is and is not important. This is a good time to reflect on what gives your life real purpose and satisfaction.
When the recession comes, make sure you’re on the inside looking out. And once you’re on the inside make sure your boss wants to keep you around.
Now don’t let anyone tell you that money can’t buy happiness. You need to pay attention to the first two things on the checklist. We all like nice things. And if you’re constantly worrying about how to keep food on the table and the lights on, your life is a misery.
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At the same time, though, don’t let anyone tell you the kind of happiness that money does buy—the cars, the vacations and all the rest—is all that matters. You need more than a job and money to give your life purpose and real satisfaction.
If you’re doing it right, you’re constantly trying to discover and strengthen those other things. These don’t have to be life changing and profound. If you want to join a faith community or reconcile with a difficult relative, fine. But restarting a low-stakes poker night with your buddies can work, too. We’re social animals. It’s a cliché but it’s true: we get more meaning from the people around us than the things we own.
And the best of those things are recession-proof.
Michael Davis is a clinical professor of economics at the Cox School of Business at Southern Methodist University.