Why America is headed towards Recession and What You Can Do about It
The pandemic, followed by the Ukraine-Russia war, had a detrimental influence on the global economy and raised global inflation. According to statistics, America is on the verge of a recession due to rising inflation and other factors.
Recession can negatively impact the citizens of America by causing an increase in employment, reduced income, uncertainty, and loss of growth opportunities. Let’s further discuss why is America headed toward recession and what measures you can take to minimize the negative impacts of the recession on your life.
What is Recession?
A recession is a period of economic difficulty marked by high unemployment rates, weak corporate sales, and a fall in the nation’s overall economic growth. Several variables affect when the economy enters a recession officially.
The economist named Julius Shiskin devised a few general guidelines to describe a recession. Two straight quarters of decreased GDP was among the most favored indication of a recession.
Shiskin believed that a healthy economy advances with time; thus, if economic growth has been declining throughout two consecutive quarters, it is a clear indication of a recession. Shiskin’s method of defining a recession became the widely used definition to explain the term over time.
Why Is America Headed Towards Recession?
Disruptions of the Supply Chain across Asia and trade sanctions against Russian gas and oil have caused the U.S. inflation crisis, which started in 2021. This is one of the leading causes of the rising inflation and expected recession in America. According to reports, the (PCE) price index increased 6.3% year on year in July.
Additionally, the Fed hiked the federal funding rate significantly in 2022 due to rising inflation, notably 75 basis points at conferences in September, June, and July. This indirectly contributes to the likelihood of a recession in America.
Moreover, the return on two years United States Treasury notes spiked over the rate on ten-year Treasury notes, which further increased worries about an oncoming recession in America.
In the past, the inversion of the yield curve has been a reliable predictor of economic decline. Experts have noted that the inversion of the yield curve is alarmingly deep because it is the deepest since the global economic meltdown, which occurred in 2007.
What You Can Do About the Upcoming Recession in America
Here are a few measures you can take to prepare yourself for the upcoming recession in America.
Avoid or Delay Major Purchases
Before an oncoming recession, making unnecessary large expenditures such as a vehicle, home, or designer handbag might be an unwise move that can cost you in the long run. When you are on the verge of a recession, you want to make wise decisions and buy what is necessary. Price increases during a recession can significantly reduce your wealth.
Therefore you should save as much as possible. Furthermore, recessions result in layoffs and firm closures, so if you are the victim of a recession-induced layoff, you will regret those unnecessary purchases.
Pay Off Pending Debts
If you have a consistent source of income and any pending bills, now is the time to work harder to pay them off so that you won’t be burdened by debts when the recession hits.
Managing rising inflation while paying off debts can be incredibly difficult, and you may need to make significant lifestyle adjustments and cut back on costs. Working on debt repayment now can help you handle your growing monthly expenses more efficiently.
Add More Money to Your Savings
Even though adding more than what you usually add to your savings can be challenging, doing so can help you boost your savings to prepare for the upcoming inflation. Here are a few ways you can save more and spend less:
- Create a budget and stick to it: A budget can help ensure you spend what you want each month. You can create a budget according to the amount you want to save each month
- Avoid impulse purchases: Recent market research reveals that 40% to 80% of purchases account for impulse purchases. The best way to avoid impulse purchases is to think about every purchase and ask yourself if you need it before buying it
- Focus more on your needs rather than wants: If you love spending on gadgets or clothing items, now is the time to focus more on the items you need rather than these wants
- Find ways of earning passive income: Passive income is a method of earning money that requires minimal effort. Having a passive income stream other than your full-time job can significantly help you boost your wealth and prepare for the inflation
- Avoid using credit cards: When you use a credit card, you must repay the amounts borrowed each month. If you tend to use credit cards, it is time to break that habit. When using credit cards, it’s easy to lose track of how much money you’re spending. Instead of using credit cards, pay for your groceries and shopping sprees using a debit card. When you see the amount of your purchase reflected on your debit card, it creates a sense of urgency and may motivate you to spend less the next time
Precious Metals IRA Investment
A recession severely impacts retirees since price increases may lead them to spend their savings rapidly. So, if you’re looking for a means to safeguard your savings or retirement account from economic recession, a precious metal IRA is an ideal option.
While mutual funds, bonds, and stocks are among the usual choices for an IRA account, the best precious metals IRA will put you in charge of deciding what you want to invest in. Gold and silver investment companies offer precious metals IRA account, and signing up for one will help you increase your savings and feel secure during a recession.
Prepare For a Possible Recession with Orion Metal Exchange
Now that you know the likelihood of the upcoming recession in America, you can follow the abovementioned methods to prepare for it. If you want a precious metals exchange to sign up for a precious metals IRA account, check out Orion Metal Exchange.
We have over 40 years of experience in the industry, and we can help you get through this recession quickly. You can also purchase silver, gold, and other precious metal-based products from us at excellent prices.
Get in touch now for further details on our gold and silver IRA accounts!