Americans fear that their economy could quickly decline after the two-year coronavirus pandemic and subsequent recessions.
According to the survey, 81% believed the U.S. would experience a recession in 2022. CNBC + Acorns Invest in You survey, conducted by Momentive.Surveys of almost 4,000 adults were conducted online between March 23 and 24.
According to the survey, certain groups see an increase in economic uncertainty than others. The survey found that Republicans are more likely than Democrats to believe there will be an economic recession. This also applies to those who consider themselves financially poorer than they were last fiscal year.
A recession is what it means
According to the National Bureau of Economic Research (arbiter of defining recessions), one is a “significant decrease in economic activity spread throughout the economy that lasts longer than a few weeks.”
However, since that time, the U.S. economic recovery has been remarkable. Millions of workers have been added to the labor market, and it is now back at pre-pandemic levels. Additionally, many workers have seen their wages rise, even for those who work in low-paying positions.
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Many economists don’t worry about a possible recession.
According to Nick Bunker (economic research director North America, Indeed Hiring Lab), “If you take a look at the labor markets data right now you’d find very few indications of recession.” Although there may be a slowdown in the overall economy, it’s still hot.
There are risks ahead
Despite the fact that labor recovery continues to be strong, other factors are still affecting consumers.
For example, inflation has been a major problem for many Americans and may hinder economic recovery. The February issue of the consumer price index surged 7.9% on the year, the highest since January 1982.Many categories, including housing and food, have seen prices rise.
Robert Frick (corporate economist, Navy Federal Credit Union) said that inflation is the biggest obstacle to recovery.
That’s because if prices continue to climb — as they’re projected to — people may begin to pull back on spending, which could lead businesses to halt hiring. In order to reduce inflation, the Federal Reserve will continue raising interest rates.
Bunker says that this is not a useful tool. Bunker says that while the central bank should be cautious about cooling the economy sufficiently to reduce prices, it must not tip the United States into another recession.
Geopolitical uncertainties surrounding the conflict in Ukraine have contributed to higher fuel prices. They will continue to exert pressure on the global economy. The yield curve is also between the 2-year 10-year U.S. Treasury bondsRecent inverted for the first time since 2019, a signal that has preceded recessions in the past.
Frick stated that it isn’t an indicator of a possible recession.
He said, “Of all things that you need to be concerned about, I don’t believe that the yield curve turning is one of them.”
How to get started
Although it is too soon to plan for recession in the United States, Americans can take action now to improve their financial position.
It includes increasing retirement and emergency savings, as well cutting budgets to reduce spending in an inflationary environment.
Frick stated, “It’s worth taking a look back at all the positives and weighing the historical evidence against the negatives.” While the odds of a recession remain low, there are many risks, as well as high uncertainty.
Disclosure: Comcast Ventures and NBCUniversal are both investors Acorns.