Actions include spending less on discretionary purchases, paying down credit card debt, looking for more stable income
As fears of a possible full-blown recession grow, anxious Americans are taking action to prepare their finances, according to a new survey released by Bankrate.
The survey found that 74% of respondents are actively taking steps to prepare for an economic downturn. About 47% of respondents surveyed are spending less on discretionary purchases, 35% are saving more for emergencies, 30% are paying down credit card debt, 24% looking for additional or more stable income, 19% saving more for retirement and 4% are doing something else. Twenty-six percent said they were not taking steps to get their finances ready.
Gen Z and millennials were more likely to say they were looking for additional income (36%), compared to 24% of Gen X and 11% of Boomers.
According to the survey, 69% of respondents, or nearly 7 in 10 Americans, say they’re worried about the possibility of a recession before the end of 2023.
Almost half (46%) of Black and Hispanic Americans surveyed said they would not be prepared for a downturn before the end of 2023, compared to 38% of White Americans. Women were more likely than men to say they were not at all prepared, according to the survey.
More than half (53%) of survey respondents who make less than $50,000 annually said they don’t feel ready for a downturn, compared with 32% earning between $50,000 and $79,999, 21% earning between $80,000 and $99,999, and 24% earning $100,000 or more.
The findings come as consumer prices rose 8.5% year over year in July, cooling slightly but still near the highest level in 40 years. More than half of Americans surveyed (51%) by Bankrate expect inflation to be higher a year from now, while just 16% expect it to be lower than a year from now.
The survey was conducted between July 27 and 29 and sampled 2,390 adults.
There is a growing consensus on Wall Street that the Federal Reserve will trigger a recession as it battles inflation with a series of aggressive interest rate hikes. Policymakers approved the second consecutive 75-basis-point rate hike in July and have indicated that another supersized rate hike is on the table in September, depending on forthcoming economic data.
Federal Reserve Chairman Jerome Powell will offer a fresh update on the U.S. economic outlook during a speech at the agency’s annual economic symposium in Jackson Hole, Wyoming, on Friday.