The US economy has faced significant challenges in recent months, with tariffs imposed by the Trump administration potentially reversing economic growth and harming Americans financially. Economists predict a 2.7% decline in US GDP for the first quarter of 2025, the worst since the Covid-19 pandemic peak in mid-2020. Recent data indicate a weakening economy, although not yet in a downturn.
Inflation accelerated in the first quarter, and private-sector employers added fewer jobs than expected in April. The stock market also experienced significant fluctuations. In these uncertain times, it’s essential to take steps to protect your finances.
Consider creating a backup plan, establishing financial safeguards, reviewing and adjusting your spending, and protecting your investments. Diversify your portfolio by combining stocks and bonds to reduce volatility.
Protecting your finances in uncertain times
For long-term investors, stock downturns can present buying opportunities. Consider allocating a portion of your stock portfolio to international equities to diversify your investments better. Lauryn Williams, a certified financial planner, advises focusing on what you can control to reduce anxiety and make better financial decisions.
Stick to buying only necessities, watch out for scams, and be wary of information overload. Continue building your emergency fund and short-term savings. Consider temporarily making minimum payments on your debt to keep more money in your pocket.
If you’re nearing retirement, consult with a financial professional to create a plan. To recession-proof your finances, build an emergency fund, manage debt, diversify income streams, invest smartly, cut non-essential expenses, and stay informed about economic trends. Economic uncertainty is challenging, but taking proactive steps can help you weather the storm and come out stronger on the other side.
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