Majority of Americans Actively Taking Steps to Weather a Recession, With Spending Cuts Most Popular Preparation

A shopper is seen past a sign displaying the price per pound of russet potatoes at a supermarket in Montebello, Calif., on Aug. 23, 2022. Frederic J. Brown/AFP via Getty Images

A large number of U.S. citizens are taking preparatory steps to confront a looming recession and are cutting down on their spending activities, according to a latest Bankrate survey.

When questioned as to how prepared they are for a recession before the end of 2023, 42 percent of respondents said they were “somewhat prepared, while 17 percent were “very prepared” for the economic situation, states an Aug. 24 Bankrate post detailing the results of the survey. While 24 percent admitted to being “not too prepared,” 17 percent said they were “not at all prepared.”

Almost three in four respondents are actively taking steps to prepare for a recession. While 47 percent are spending less on discretionary services, 35 percent are saving more for emergencies, 30 percent are paying down credit card debt, 24 percent are seeking additional/stable income, and 19 percent are saving more for retirement.

Income-wise, 53 percent of individuals making less than $50,000 per year said they do not feel ready for an economic downturn.

Among those making between $50,000 and $79,999, 32 percent were unprepared. This number fell to 21 percent among individuals earning between $80,000 and $99,999, and 24 percent among people who make over $100,000 annually.

A Sept. 26 Bankrate post detailing the results of an August poll reveals that 40 percent of Gen-Zers—aged between 18 and 25—are neither prepared for a recession nor are taking steps to put their finances in order. Experts call such behavior “recession fatigue.”

“From the Great Recession that may have caused financial stress for their parents to the chaos in health, safety, and stability that occurred with the pandemic, these formative events have fundamentally impacted the way Gen Z views the world,” said Megan Gerhardt, professor of leadership and management at the Farmer School of Business at Miami University, according to the post.

US Recession

The United States contracted by 1.6 percent in the first quarter of 2022 and by 0.6 percent in the second quarter. Two consecutive quarters of negative GDP growth are usually considered an indication of recession by some economists.

However, the National Bureau of Economic Research (NBER), a semi-official nonprofit that tracks economic downturns, has yet to declare the U.S. economy to be in a recession.

While speaking to Fox News on Sept. 15, Kenneth Rogoff, former chief economist for the International Monetary Fund, pointed out that the United States is in a “productivity recession.”

There has been an increase in the number of people working from home where they are “working less.” This in turn makes “effective wages higher than they seem,” thus contributing to the recession, he said.

The Leading Economic Index (LEI), a forward-looking gauge that includes 10 individual indicators, fell for the sixth consecutive month in August. This potentially suggests a recession, Ataman Ozyildirim, senior director for economics at the Conference Board, said in a statement.

As of Sept. 26, the benchmark S&P 500 Index is down by more than 23 percent year to date, while the Dow Jones Industrial Average has declined more than 20 percent since the beginning of the year.