Batten Down the Hatches

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They are all saying the same thing essentially about the economy and what's to come. Those big corporate juggernauts. Tighten the grip and get ready. Or as Jeff Bezos recently said, "Batten down the hatches." Jamie Dimon warned us things are going to get rough very early on, and recently Goldman Sachs CEO David Solomon said a recession is very likely. Jeff Bezos is the latest to chime in, but Elon Musk has been vocal about it as well. The key takeaway from this post is not to lay blame, but to simply say it's coming, and to make sure people are very well aware of it. It pays to be prepared rather than find yourself facing the challenges with your pants around your ankles. In other words, take it seriously. 401k's and IRAs and other retirement plans are going to take a major hit. A recession is underway and will happen. With that comes massive job losses as the economy shrinks under the pressure. And on top of that, inflation will not end any time soon. It will continue for at least another year or so. Although, hopefully we will see less spikes in consumer prices as we go forward. We have to keep in mind, however, that major events could be coming as well. And they could stimy even the most aggressive efforts of the Fed to taper the rising cost of goods and services. On top of that, we have very little leadership at the top when it comes to economic policy, and that is a factor to consider as well. The bottom line is that now is not the time to spend. It's the time to save. It's the time to hold on to as much of your paychecks as you possibly can and build emergency funds. It's the time to clear up as much debt as you possibly can to both open up lines of credit, but also to avoid accumulating more debt through interest charges that will rise due to the Fed raising rates, and if you find that the economy only allows you to make minimum payments on credit cards. If the Fed rate rises to 4% and beyond, you could see credit card rates jump to upwards of 30% or more. And that's not subject to usury simply because the rates credit card companies can charge are relative to the Fed rate. The good news is that this coming recession should not be as bad, nor as long-lived as the Great Recession we suffered during the Obama years. However, with inflation being at 40-year highs, it will simply make even a lesser recession and shorter-lived one all that much more painful. I would heed the advice of these guys who know a thing or two about money and just make sure you are ready.