Recession fears are rising as the stock market plunges and investors, economists, and businesses start to sour on the economy. This comes as President Trump aggressively implements tariffs and retaliatory threats against some of the United States’ biggest trading partners. In fact, Google searches for the term “recession” have soared since March of this year. A recession is a period of slowing economic growth and reduced job availability. It is sometimes referred to as a depression or a slump, though these terms are typically reserved for more severe downturns that last longer than six months.
Recessions are usually accompanied by rising unemployment, falling stock prices, and reduced spending. Consumers may also start to save more in order to protect their assets and incomes, while businesses may cut back on investment projects or lay off employees. In addition, interest rates often rise during economic downturns, making it harder to borrow money to buy a home, a car or even a credit card.
However, just because the economy is slowing down does not necessarily mean a recession is imminent. Recessions have historically varied in length, from as short as two months (the COVID-19 pandemic) to the Great Recession that lasted 18 months from 2007 to 2009. While a recession is not inevitable, there are steps you can take to prepare for uncertain economic times. Start by creating a financial plan and keeping it updated as your circumstances change. This will help you make smart decisions, including keeping subscription services that aren’t working for you or cutting back on unnecessary spending.