There are still a few months left before we enter 2023, but the recession warnings are already coming in thick and fast. While President Biden and Treasury Secretary Janet Yellen remain cautiously optimistic, other experts are queuing up to warn of a potential economic slowdown.
What the experts think about a potential recession
Here's what some prominent figures are saying.
JPMorgan CEO Jamie Dimon: "This is serious stuff"
The billionaire businessman and banker has been warning of an impending recession for some time now. Earlier this month, he predicted that the U.S. was likely to enter a recession in the coming six to nine months. That would mean somewhere between March and June next year. Dimon is concerned about what he called "serious" issues facing the world, including inflation, Russia's invasion of Ukraine, and interest rate hikes.
President Biden: "I don’t think there will be a recession."
President Biden thinks a recession is unlikely, though he admits it is possible. If it does happen, the president argues it will be slight. The president told CNN that people keep on predicting there'll be a recession, but it hasn't happened yet. "We're in a better position than any other major country in the world, economically and politically," he said.
Over 80% of CEOs foresee a recession in the next year
According to KPMG's latest CEO survey, 86% of top executives believe there will be a recession in the next 12 months. The good news? Almost 60% think it will be mild and short. Plus, over three-quarters of CEOs surveyed already have plans in place to deal with an economic slowdown. Moreover, 71% are optimistic about the global economy over the next three years.
Nouriel Roubini: "It's going to be severe, long, and ugly"
The economist who earned the nickname Dr. Doom for correctly predicting the 2008 financial crisis has no doubts that a recession is on its way. Not only that, but he told Bloomberg that it won't be short and shallow -- in fact, he predicted quite the opposite.
He blames the high levels of debt held by both corporations and the government, and argues that we're heading for a "stagflationary crisis." Stagflation is essentially where the high unemployment and slow growth of a recession combine with the impacts of high inflation -- not a great mix. He's even written a book called MegaThreats that sets out how you can survive a recession.
United Nations: "There is still time to step back from the edge of recession"
The UN Conference on Trade and Development chief Rebeca Grynspan told global leaders a global recession could be avoided, but they need to act now. If not, the UN body warns the economic damage could be worse than the one caused by the 2008 financial crisis. It says the current course of action harms the most vulnerable, especially in developing countries.
Treasury Secretary Janet Yellen: "I think the United States is doing very well"
The Treasury secretary is optimistic about the U.S. economy. In a recent interview with CNBC, she pointed to the country's resilience and strong job market. The prominent economist told CNBC that the current slowdown is to be expected after the country's strong recovery from the pandemic. Most of all, Yellen believes it will be possible for authorities to find a path that both reduces interest rates and also maintains a healthy labor market.
If there is a recession, know that it will pass
It's understandable if all these recession warnings are unnerving. But bear in mind that it may not happen. Economists use a mix of different numbers to make their best guess at what's to come, and they are not always right. Even if we do hit a recession, it may not be as severe as Roubini predicts. Moreover, recessions are part of economic cycles and they do pass.
With that in mind, the best way to prepare is to make sure you're able to outlast the storm. In normal times, experts recommend building an emergency fund that contains three to six months' worth of living expenses. In times of recession, many advise having a year's worth of cash in your savings account. This may seem like a tall order, especially given the higher cost of living. But do what you can -- every dollar you put aside now could help.
Another step you can take is to aggressively pay down high interest debt, particularly credit card debt. Start by making a plan for how you're going to tackle it, whether that's paying off the lowest balances first or prioritizing the balances that earn the highest interest. Try to set realistic goals so you can celebrate your achievements rather than becoming disheartened and giving up.
Finally, think about how you might recession-proof your career. A lot depends on what your long-term goals are and what industry you're in. Perhaps it's worth trying to pick up new skills, take on additional responsibilities, or get up to date on developments in your field. Or you might put time into updating your resume and connecting with your professional network.
Time spent preparing for a recession won't be wasted
We may or may not enter a recession next year. But there's no harm in being prepared, particularly as none of the steps above are bad things to do in and of themselves. The worst that could happen is that you end up with a robust emergency fund and a shiny new resume.
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