Everyone in five lacks funds to cover basic expenses.
According to a recent survey by The Balance, 44% of U.S. adults stated they don’t think they’ll be financially prepared if a recession occurs due to approaching recession fears. Compared to those earning above $75,000, of whom 14% said they weren’t at all prepared, people earning up to $50,000 were more likely to say they weren’t at all prepared (36%). Additionally, about four out of ten respondents believe their financial situation will worsen in the upcoming year.
Key Takeaways
- 44% of American adults indicated they are not financially prepared for a recession. Recession fears are confirmed.
- 17% of respondents questioned about their financial position claimed they don’t have enough money to cover their basic needs.
- Inflation has “significantly” harmed more than a quarter of American adults, and 92% are reducing their expenditures.
44% of U.S. Adults Are Not Financially Ready For a Recession
More than half of respondents told The Balance they either don’t have enough money or just enough to handle their basic needs, which may contribute to people’s present financial predicament.
Although a recession in the United States is not a given, economists and business executives have predicted it could happen by the end of 2022 or the start of 2023.
Anyone may find it challenging to deal with a recession, which is roughly characterized as a significant drop in economic growth and a rise in unemployment over a few months.
In case a recession hits, there are ways to prepare financially. You may increase your chances of surviving a recession by building up your emergency fund, paying off debt, and refraining from making significant expenditures that you could not afford later.
Every 1 in 4 Will Be Impacted By Rising Inflation
Respondents were also worried about inflation in addition to the recession. With prices soaring at a rate not witnessed in nearly 41 years, inflation reached 9.1% in June.
Most respondents indicated that price hikes have affected them at least slightly, while 26% told The Balance that they have been “very impacted.”
Most adults have seen price hikes at the grocery store, closely followed by rising prices at the gas pump. More than 25% have noticed a rise in the price of alcohol and recreational drugs, while over 40% have noted an increase in housing prices.
92% of respondents claimed they were reducing their expenditures due to inflation. In a different survey taken in May, 76% of readers of The Balance reported that they were reducing their spending due to inflation. Many of the individuals who are now making cuts have postponed discretionary purchases, such as skipping dates or delaying important milestones like home purchases.
Inflation Might Be Here To Stay
About half of those surveyed predicted that inflation would continue for at least another year. One in six respondents, who were more upbeat, thought it would only endure for a few months, compared to the same proportion of adults who believed inflation would continue for at least another two years.
Regardless of income, age, gender, or geographic location, inflation affects everyone. There are, however, ways to safeguard your funds from price rises.
Negotiating for a raise and raising your income is one approach to combat inflation and the devaluation of your dollars while the labor market remains tight. Reduce your spending by reducing unneeded purchases and adjusting your budget accordingly. Your financial portfolio might also aid the battle against inflation. Look into Series I savings bonds, intended to protect your money from inflation, or Treasury inflation-protected securities (TIPS), which may let you profit from inflation.
