JPMorgan CEO Sounds a Warning: The U.S. Economic Recovery Could Backslide
When the COVID-19 outbreak first hit U.S. soil in early 2020, it spurred an economic crisis many people weren't prepared for. Thankfully, the economy is in much better shape today than it was two years ago. Not only are unemployment levels down, but there are millions of available jobs to be had.
Despite that progress, JPMorgan CEO Jamie Dimon isn't confident in the direction the economy is headed. In fact, he thinks a combination of the Ukraine conflict and rampant inflation could pose a threat to the economy and lead to stalled economic growth. And that's a scenario all of us need to prepare for.
Gearing up for a recession
While the U.S. economy isn't necessarily on the verge of a recession right now, things could take a turn for the worse in the course of the year. And so it's important to prepare ourselves for that possibility.
Perhaps the best way to gear up for an economic downturn is to load up on emergency savings. Unemployment tends to pick up during recessions, but if you have a healthy sum of money in your savings account, you might manage to get by if your paycheck goes away or shrinks significantly for a period of time.
In fact, as a general rule, it's a good idea to keep enough money in savings to cover three to six months of essential bills. Remember, even if you're eligible for unemployment benefits in the wake of a layoff, those benefits will only replace a portion of your former paycheck. Having adequate savings on hand could make it so temporary job loss doesn't force you into debt.
And speaking of debt, now may be a good time to work at whittling down any credit card balances you're carrying. Having one less payment to worry about could make a recession easier to cope with, especially if you end up losing your job or seeing your hours slashed.
Finally, you may want to line up a second income stream in light of Dimon's warning. That extra money could be your ticket to boosting your savings and digging your way out of debt before economic conditions worsen. Plus, if a recession hits and you lose your job, you'll be left with a second gig to fall back on. And if it's a side hustle whose hours you can increase as your schedule allows for it, you might manage to replace a decent chunk of your payment.
Plan for the worst
Nobody wants to picture a period of economic distress -- not when our last downturn wasn't so long ago and things seem so much better. But while there's certainly no need to panic over an imminent recession, it's also a good idea to prepare for one.
A big reason so many people took a financial hit in the early days of COVID-19 is that they had no savings to fall back on and no means of coping with job loss. If you set yourself up to weather an economic storm, you'll be more likely to get through a recession unscathed.
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