‘Not looking so great’: How to prepare for a potential recession

SPOKANE, Wash- As families continue to deal with higher gas prices and groceries, some are worried a recession could be on the way. However, economists say you shouldn’t panic, but now might be a good time to take a look at your finances.

Economists say it’s hard to predict when a recession will happen, but the chances have doubled since the beginning of the year. Earlier this year, forecasters would’ve predicted there was a 20 percent chance of a recession, and now that number is up to 40 percent.

Grant Forsyth, chief economist with Avista, predicts the recession would be a milder one with a somewhat slower recovery compared to the recession we saw in 2008.

He says the biggest culprit is inflation. He says the Federal Reserve has acted dramatically with all central banks around the world starting to raise rates and as a result, it has slowed down the economy.

“That’s probably what’s putting us at risk of a recession is central bank policies trying to rein in inflation,” Forsyth said.

Forsyth suggests paying off any short-term debt such as a credit card.

“A lot of people get into trouble during a recession because they go into that with a lot of short-term debt and it becomes maybe hard to pay especially if they lose their job or have reduced hours,” he said.

Michael Goff lost his job in manufacturing during the pandemic and has concerns over the potential recession.

“I’ve had a lot of people I’ve talked to lately and a few friends and ex-coworkers that are kind of in the same situation, and it’s in my opinion not looking so great,” Goff said.

But others like Elain Nielson, aren’t too worried about the potential.

“I have kind of been affected by previous recessions. I have never really gotten to a place where I’m financially stable, financially secure. I’m not in a place I can pay off my loans. I’m not in place where I can easily get a house,” she said.

Forsyth doesn’t predict the housing market will take a hit but that prices will not drop such as what happened in the last recession.

If you’re planning to switch jobs, Forsyth says to do your homework as the labor market is already dealing with hiring freezes and shortages.

“Make sure you do your homework. Look at the industry you’re thinking about switching to and look at statements from CEOs and so forth about where they think hiring is going to be in the future,” he said.

READ: Gas prices in Inland Northwest plunge as traders fear recession, customers still feel the pinch