From RamseySolutions.com…
Recession.
Just hearing that word can cause some people to clench their teeth, clutch their chest, and run to the bank. With crazy high inflation, gas that’s around $5 and rising interest rates, you’ve probably heard rumblings that an economic recession is looming.
So, is a recession coming? And if it is, how do you prepare for a recession?
Well, it’s a good idea to have your finances in order—always. But we’re here to tell you how you can be prepared and not go off the deep end. So, relax. You don’t need to build a bunker, stuff a pile of cash under your mattress, or stock up on toilet paper.
Bottom line? Don’t freak out! Here’s how you can make sure you’re prepared for a recession, whether one is coming or not.
What Is a Recession?
Be honest: You were thinking it. If it’s been a hot minute since you’ve been in an economics class, we’ll get you up to speed.
The National Bureau of Economic Research says a recession happens when there’s a “significant decline in economic activity spread across the economy and lasts more than a few months.”1
Or in non-professor terms: The economy is in a funk.
Economic growth is measured by GDP (gross domestic product), which is the total value of all the goods and services made and produced by the American economy. Normally, GDP grows little by little. Recession is just a big word to describe when GDP is negative for two quarters—or, in other words, GDP stops growing for six months.
