With recession fears looming, 44% of U.S. adults said they don’t believe they are financially ready if a recession hits, according to a new survey from The Balance. People earning up to $50,000 were more likely to say they weren’t at all prepared (36%), compared to those earning over $75,000, of whom 14% said they weren’t at all prepared. In addition, around four out of 10 adults expect their finances to get worse over the coming year.
- Recession worries are real, and 44% of U.S. adults said they aren’t financially prepared for a recession, according to a new survey from The Balance.
- When asked about their current financial situation, 17% of respondents said they don’t have enough money to cover basic expenses.
- More than a quarter of U.S. adults said they have been “extremely” impacted by inflation, and 92% are cutting back spending thanks to those higher prices.
Part of that concern may be due to people’s current financial situation; more than half of respondents told The Balance that they either don’t have enough money or have just enough money to cover their basic expenses.
It’s not guaranteed that the United States will enter a recession, but economists and business leaders have forecasted that a recession could hit the economy by the end of 2022 or the beginning of 2023.
A recession—broadly defined as a significant decline in economic growth and an increase in unemployment for more than a few months—can be a difficult situation for anyone to navigate.
However, there are ways to financially prepare in case of an economic downturn. Increasing your emergency savings, paying off debt, and avoiding large purchases that you might not be able to afford later are ways to improve your chances of weathering a recession.
1 in 4 Adults Are ‘Extremely Impacted’ by Inflation
In addition to recession worries, respondents were concerned about inflation. Inflation hit 9.1% in June, with prices rising at a pace not seen in nearly 41 years.
A majority of the adults surveyed said that they have been at least somewhat impacted by price increases, while 26% told The Balance they’ve been “extremely impacted.”
The grocery store is where most adults have noticed price increases, followed closely by higher prices at the gas pump. Nearly 40% have seen housing prices increase, while more than 25% have seen inflation in alcohol and recreational drugs.
In response to inflation, nearly all respondents—92%—said they’re cutting back on their spending. In a different survey conducted in May, 76% of The Balance readers said they were cutting spending because of inflation. Of the adults cutting back now, many have put discretionary spending on hold, from going on fewer dates to pausing major milestones such as buying a house.
Will Inflation Continue for 12 More Months? People Think So
Looking to the future, nearly half of respondents said they believe inflation will last at least another year. Around one in six were more optimistic and believed it will only last for less than six months, while a similar number of adults said inflation will last at least two more years.
Inflation is impacting everyone, regardless of income, age, gender, or location. However, there are ways to protect your finances against price increases.
While the labor market continues to remain tight, negotiating for a raise and increasing your income is one way you can fight how inflation is making your dollars worth less. Also, cut back on unnecessary purchases, and adjust your budget accordingly to reduce spending. Your investment portfolio can also help fight the inflation battle. Consider looking at Treasury inflation-protected securities (TIPS) that could help you profit from inflation, or Series I savings bonds, which are designed to protect your money from inflation.
The Balance conducted a survey among approximately 1,200 U.S. adults from June 30 to July 9, 2022. The survey was fielded online via self-administered questionnaire to an opt-in panel of respondents from a market research vendor. To qualify, survey participants ages 18 and older must at least partially manage their own finances. Quotas were used to ensure national representation for gender, race/ethnicity, region, and generation, using Census Bureau (2019 American Community Survey) estimates as a benchmark. The Balance used quotas to match national representation for political affiliation using Pew Research’s American Trends Panel (2022) as a benchmark.
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