‘We think a hard landing will ultimately be unavoidable’: How to prepare your finances for a recession
Two years after the short, sharp pandemic-related recession, Wall Street is once again warning of a new recession on the horizon.
The COVID-19-induced recession formally started February 2020 and ended April 2020, but policymakers and regular people are still grappling with the aftereffects. In a research note this week, Deutsche Bank DB said, “We think a hard landing will ultimately be unavoidable by late ‘23/early ‘24 after an aggressive series of Fed hikes over the next 18 months.” And that’s even with the good financial shape that many consumers are in now, the note added.
As Americans’ wallets recover, MarketWatch spoke with financial experts to get their perspective on what families can do now brace for a recession: Similarly, it’s always important to maintain an emergency fund for a rainy day, but such a mundane task can be easily put off. In normal circumstances, experts recommend having enough savings to cover three months’ worth of expenses. But a recession is different.
Take the emotion out of investing In many ways, a recession is a test of willpower. For many, it’s natural to react to a market downturn by changing up one’s investment strategy — either out of fear of losing money, or out of a desire to take advantage of what seems to be an opportunity. For retirement savings, the choices you make should come down to where you’re at in life, and how soon you plan to retire. “Retirement expenses don’t come all at once but over 20 or even 30 years, so it’s important to be careful about maintaining some degree of long-term goal allocation even at Year 1 of retirement,” Cundick said.
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