Looking Toward Recession: Prepare for the Worst, Hope for the Best

"We must consult our means rather than our wishes." (George Washington) Saving is key to preparing for economic hard times. Corlaffra/Shutterstock

It has not been a great year for the markets. Economists in Europe and the United States have become increasingly cynical in their predictions for the near future, and many feel that a recession is inevitable. They are hardly alone, either. A recent CNBC CFO Council survey interviewed 22 chief financial officers from major companies, from mid-May to early June. Sixty-eight percent of the CFOs interviewed believe that a recession will occur within the first half of 2023. No one interviewed believed that we will avoid a recession; likewise, no one forecasted the recession later than the second half of 2023.

It appears that a recession is inevitable. It’s not a question of “if” but “how soon.” This begs the question: what can you do to prepare?

What Is a Recession?

The simplest way to describe a recession is to use the definition set by the National Bureau of Economic Research (NBER), the de facto authority when defining the parameters for when recessions begin and end. The NBER defines a recession as: “A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”