Skip to content
Sunday, September 24, 2023
Business Store

Business Store

Us Business

  • business & finance
  • Business Store
  • business
  • business insider
  • business ideas
  • finance
  • About Us
    • Advertise Here
    • Privacy Policy
    • Contact Us
    • Sitemap
You are Here
  • Home
  • After stocks plunged this week, here’s how to protect your finances during a period of uncertainty: ‘A hard landing will ultimately be unavoidable’
finance

After stocks plunged this week, here’s how to protect your finances during a period of uncertainty: ‘A hard landing will ultimately be unavoidable’

May 8, 20228 min read Theola Andreessen

[ad_1]

It’s been a hell of a week on Wall Street.

The Dow Jones Industrial Average
DJIA,
-0.30%,
the S&P 500
SPX,
-0.57%
and the Nasdaq Composite
COMP,
-1.40%
all closed lower Friday after plunging on Thursday, shedding all of Wednesday’s post-Fed rally.

The Federal Reserve on Wednesday hiked the benchmark interest rate by 50 basis points. Fed chair Jerome Powell said the central bank was not likely to hike its benchmark interest rate by 75 basis points at its next meeting, all but promising consecutive 50 basis rate hikes.

“We need to really see that our expectation is being fulfilled, that inflation in fact is under control and starting to come down, but it’s not like we would stop, we would just go back to 25 basis point increases,” Powell said.

As skittish investors digest Powell’s half-point hike, and brace for more, consumers have another set of worries. Two years after the short, sharp pandemic-related recession, Wall Street is once again warning of a new recession on the horizon.

“As skittish investors digest Powell’s half-point hike, and brace for more, consumers have another set of worries. ”

That’s not a lot to go on, but financial-planning experts say it ought to be enough to prompt people to come up with their own contingency plans. That’s especially so, considering the personal-finance scares that came earlier in the pandemic.

The COVID-19-induced recession formally started February 2020 and ended April 2020, but policymakers and regular people are still grappling with the aftereffects.

The Federal Reserve is trying to tame inflation, now at four-decade highs. The concern is that key interest rate hikes rising from near 0% and tighter monetary policies could crimp consumer demand to the point that the economy potentially — emphasis on potentially — takes a hard-landing thud into another recession.

There’s a 15% chance of a recession happening in the next 12 months, Goldman Sachs
GS,
-0.04%
forecasters said in April, days before Powell’s latest interest-rate hike. The chances climb to 35% in the coming 24 months, they wrote.

In a research note in April, Deutsche Bank
DB,
-0.51%
said, “We think a hard landing will ultimately be unavoidable by late ‘23/early ‘24 after an aggressive series of Fed hikes over the next 18 months.” And that’s even with the good financial shape that many consumers are in now, the note added.

If there’s been one lesson about finances and investing these past two years, it’s that market-tanking events “can always be right around the corner,” said Joel Cundick of Savant Wealth Management in McLean, Va. “While at present there are multiple known issues — global and domestic — that could trigger a recession, the real market movers can be the surprises that no one is aware of today,” Cundick said.

Here’s one data point for how quickly things can go sideways: People who were earning up to $40,000 a year suddenly faced a 40% chance of losing their jobs in April and May 2020, Powell noted in July 2020 during the peak of the first wave of the COVID-19 pandemic.

During 2020, 15% of all American adults had at least one bout of unemployment, the Pew Research Center said in April. The median incomes of lower-income households fell 3% from 2019 to 2020, adjusting for inflation, Pew researchers said. Middle-income earners, making between $52,000 and $156,000, saw their median incomes shrink 2.1%, they noted. People making more than that saw their median incomes fall 0.5%, which is essentially unchanged, researchers noted.

For many people, however, that was a quick jolt of financial pain.

Perhaps softening the blow this time around, Fannie Mae said the U.S. economy faces a “modest recession” in 2023, due in part to the Fed’s monetary-policy tightening, Russia’s war in Ukraine and rising interest rates.

MarketWatch spoke with financial experts to get their perspective on what families can do now brace for a recession:

1. Pay down debt and build a cash cushion

In a market downturn, you won’t want to cash out stocks or other investments necessarily to fund life’s many expenses. And the increased risk of job loss means many families will face the reality of needing to pull together to scrape by.

MarketWatch heard from 10 different financial experts, and one piece of advice that was universal was to right-side your finances in advance. Trimming debt, especially high-interest debt such as money owed on a credit card, will whittle down the number of monthly payments you’re responsible for and free up cash on a going-forward basis.

Even without a recession, it’s a good idea to think about high-interest debts. For example, experts note credit card APRs are poised to go up with more Fed rate hikes on the horizon. That will make it even more expensive to carry a balance month to month.

Similarly, it’s always important to maintain an emergency fund for a rainy day, but such a mundane task can be easily put off. In normal circumstances, experts recommend having enough savings to cover three months’ worth of expenses. But a recession is different.

“In a recession it may be harder to find a job if unemployed, so increasing emergency savings to six to 12 months’ worth of savings can provide additional security,” said Summer Red, education manager at the Association for Financial Counseling and Planning Education.

2. Rethink upcoming major purchases

Getting control over your spending is always a wise financial move. But it’s especially important to take a closer look at major purchases, particularly when the market is volatile.

“Avoid buying with your eyes and avoid buying because everybody says you should do it now,” said Kate Mielitz, special groups manager at the Association for Financial Counseling and Planning Education. “The housing market, auto sales — these are great examples of big-ticket items that make us feel good initially, but have very large price tags that we carry with us for many years.”

3. Take the emotion out of investing

In many ways, a recession is a test of willpower. For many, it’s natural to react to a market downturn by changing up one’s investment strategy — either out of fear of losing money, or out of a desire to take advantage of what seems to be an opportunity.

Around two-thirds of investors (61%) expect even more market volatility in the next 12 months, according to a Nationwide poll of people with investable assets worth at least $100,000. Seven in 10 said they were concerned about a recession during this 12-month span.

But giving into this emotional approach is risky, especially where retirement savings are concerned. Taking a “disciplined, systematic strategy” to investing will remove emotions from the equation, said Lisa A.K. Kirchenbauer, the founder and president of Omega Wealth Management, a financial-planning firm based in Arlington, Va.

If you’re saving for a major purchase that you plan to make in the next few years, consider proactively moving those funds into safe-haven assets or a savings account — even if that means forgoing a larger return in the meanwhile.

For retirement savings, the choices you make should come down to where you’re at in life, and how soon you plan to retire. “Retirement expenses don’t come all at once but over 20 or even 30 years, so it’s important to be careful about maintaining some degree of long-term goal allocation even at Year 1 of retirement,” Cundick said.

4. Automate your finances

For folks who don’t trust themselves to be able to manage their money without letting emotions get in the way, automating your finances can be useful. This includes everything from setting up automatic bill payments to creating direct deposits into savings or investment accounts.

The best advice, according to many financial experts, is to ignore the markets as much as possible when it comes to long-term savings. Automating your finances will make that easier to achieve.

5. Focus on your career

The short recession that occurred at the start of the COVID-19 pandemic was accompanied by a massive increase in joblessness across the country. In April 2020, the unemployment rate soared to 14.8% — the highest level recorded since this data began being tracked in 1948.

With the COVID-related recession, the job market bounced back quickly. As of March 2022, the jobless rate stood at 3.6% and employers are still hungry for labor. The 3.6% rate is just shy of the pre-pandemic rate of 3.5%, a 50-year low. That’s surely a nice bounce, but that’s not always a given. The Great Recession that began around 2008 was defined by high levels of long-term unemployment.

Rising unemployment and recessions go hand in hand. When the economy is in a downturn, companies have to make cuts to stay afloat. In the case of the COVID recession, young adults were hit the hardest by pandemic-related job losses, according to a report from the Economic Policy Institute, a left-leaning think tank.

For folks who are currently employed, taking time to prepare for the possibility of being laid off is a smart move to make now.

“Furthering your certifications, skills and experience to make yourself as valuable to current or prospective employers are all prudent steps to take now to insulate against a potential recession,” said Greg McBride, chief financial analyst at Bankrate.com.

This story was first published on April 21, 2022 and updated on May 5, 2022.

[ad_2]

Source link

"Taking Care Of Business, Amazon Business Credit Card, American Airlines Business Class, Att Business Login, Austin Business Journal, Best Bank For Small Business, Best Business Bank Accounts, Best Business Schools In Us, Best Business To Start, British Airways Business Class, Business Attire Men, Business Card Ideas, Business Casual Shoes For Women, Business Continuity Planning, Business Entity Search, Business Letter Template, Business Management Degree, Business Manager Facebook, Business Plan Outline, Business School Rankings, Colorado Business Search, Delaware Business Entity Search, Drop Shipping Business, Family Business Bet, Fox Business Live, Georgia Sos Business Search, Google Business Account, Harvest Small Business Finance, How To Build Business Credit, Is Saturday A Business Day, Is Sears Still In Business, Microsoft 365 Business, My Business Google, Name Generator Business, None Of Your Business, Ny Sos Business Search, Open A Business Bank Account, Pa Business Search", Plus Size Business Casual, Pnc Business Banking, Sos Business Search Ca, Sunbiz Business Search, The Business Of Being Born, Turbotax Home And Business 2020, Tx Sos Business Search, Venmo For Business, Verizon Business Plans, Virtual Address For Business, What Are Business Days, Women Business Casual
Share
Facebook Twitter Pinterest Linkedin

Post navigation

Alabama First-Time Homebuyer Programs in 2022
Truist Acquires Fintech Long Game in Bid for Younger Customers

Related Posts

  • The Importance of Personal Finance Today

    September 19, 2023December 8, 2022
  • Making Money Online: Creating Passive Income Through Information Products

    September 16, 2023December 8, 2022
  • Finance to Consolidate Debts – The Solution to Your Debt Problems

    September 11, 2023December 8, 2022
September 2023
M T W T F S S
 123
45678910
11121314151617
18192021222324
252627282930  
« Aug    

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • November 2018
  • October 2018
  • December 2016

Categories

  • business
  • business & finance
  • business ideas
  • business insider
  • Business Store
  • finance
  • technology

Recent Posts

  • Reasons Why Businesses Should Use Reusable Shopping Bags
  • Limited Liability Insurance for Small Business Info: A Brief Summary of LLP Insurance
  • Us Business News Today
  • Digital Trends and Technologies Transforming CX in Banking and Finance
  • Going From Zero To Full Blown Business With Magick
Intellifluence Trusted Blogger

BL

buildinglink.buybacklinks.online/agence-seo

Tags

"Business Insurance Cover Coronavirus 5e Business Profit Ahron Levy Columbia Business School Att Business Login Business Business Consultant Certification Austin Business Letter With Logo Example Business Located Easy Location Business Platform Stocks Business Positions Seattle Business Regulation Legal Services Daystarr For Business Dimagi Business Development Toolkit Do Business Schools Accept Entreprenuers Enironmentall Friendly Business Ideas Eric Early Republican Business Owner Essec Business School Dean Essential Business To Remain Open Example Small Business Fall Winter Business Hours Template Fdot Woman Owned Business Certification First Business Women United States First Com Business Fixing A Damaged Reputation Business Florida Business Enforcement Free Small Business Communication Tool Law School Business Entity Outlines Mapping A Business Location Medical Business Trends Economics Mix Business And Personal Money Mlm Nit Small Business Legally Patricia Saiki Women'S Business 1990 Safety Business Proposal Sample Business Plan Entrepreneur S Corp Business Deductions Signs For Business On Roads Small Business Forums .Net Tech Monkey Business Ttu Business Cards Template Turbotax Business Nys Forms Uf Business School General Studies Yelp Business .Json Yelp Tax Attorney Small Business Your Business Department Zeus Panda Business Moel

Visit Now

Elements Of Art

getlinko

getlinko

"The article must be 100% plagiarism-free, and your content should be at least 3 links. We are allowed all topics of articles which is related to SEO, marketing, advertising, blogging, and search engines. Some Rules: 1. The post will be permanent 2. Promotional articles are not acceptable 3. You have to provide at least 1500 to 2500 words, 100% unique, informative not promotional content 4. We can use only anchors like click here, read more, this website, your website name, brand name"

Related Article

finance

The Importance of Personal Finance Today

September 19, 2023December 8, 20223 min read
finance

Making Money Online: Creating Passive Income Through Information Products

September 16, 2023December 8, 20223 min read
finance

Finance to Consolidate Debts – The Solution to Your Debt Problems

September 11, 2023December 8, 20223 min read
finance

Creating a Paycheck for Retirement – A Series on Retirement Income Planning

September 5, 2023December 8, 20226 min read
portalmenschenpartner.xyz
Proudly powered by WordPress | Theme: Engage News by Candid Themes.

WhatsApp us