Summarize this content to 2000 words in 6 paragraphs President Donald Trump’s tariff plans have sent shock waves through the stock market, and raised fears that the U.S. could be on the cusp of a significant economic downturn.These concerns have been heightened by the actions of the Department of Government Efficiency (DOGE), as well as the looming threat of a government shutdown.Newsweek spoke with experts on how individuals and households—both high- and lower-income—can shore up their finances in preparation for any coming fiscal challenges.Is a Recession Coming?Certain closely monitored economic indicators suggest that markets and consumers are wary of America’s near-term fiscal outlook.Last week’s GDP forecast from the Federal Reserve Bank of Atlanta pointed to a contraction in annualized growth to -2.8 percent for the first quarter of 2025.
How to prepare for a recession in 2025.
How to prepare for a recession in 2025.
Photo Illustration by Newsweek
While this has been viewed by some as an outlier caused by a surge in gold imports, the price of gold itself—a historic hedge against dollar devaluation and weak economic growth—has risen by nearly $300 since the start of the year (11 percent).Meanwhile, the CBOE Volatility Index, which measures the extent of portfolio protection sought by investors and institutions, climbed from approximately 15 to 24 points last week, where it has remained since.As a result of these warning signals, as well as measured declines in consumer confidence, financial institutions have raised their predictions for a recession in the near future.How Can You Prepare for a Recession?Experts shared insights on how to prepare for a potential recession, providing advice that rings true regardless of the country’s future economic situation.Jason Schenker, chairman of The Futurist Institute”Cutting back on discretionary spending and reducing high-interest debt” are two critical strategies in preparing for a recession, Schenker, author of Recession-Proof: How To Survive and Thrive in an Economic Downturn told Newsweek.”Recessions are deflationary, because a slowdown is when individuals and companies cut back on expenses, especially discretionary spending.” he said. “This is a tried and true strategy when a downturn seems imminent, although if enough people and businesses do it, the pullback on consumption can contribute to a slowdown, making recession more likely.”Investors, he said, should “try not to time the market, nor should they invest more than they can afford to lose.””These are always good strategies, but they are more important in times of weakness,” said Schenker, who is the President of Prestige Economics.Lower income families are advised to “prioritize investing in education that could get them higher paying jobs relatively quickly.””Healthcare, the trades, commercial drivers (trucking), and a few other key sectors may present significant outsized opportunities in a short period of time,” he said.”Lowering costs and increasing income potential are critical strategies in a recession, although they are solid strategies anytime,” he added.Tom Hegna, economist and retirement planning expertTrump has “rapidly implemented” many of the changes he promised on the campaign trail—restructuring America’s trading environment being a key example—the impacts of which Hegna said no one will be able to predict with any certainty.However, during periods of uncertainty, Hegna told Newsweek that having stability in both investments and employment is essential.”The insurance industry was built for times like these,” the author of Don’t Worry, Retire Happy! said. “There are products that can give significant market upside but also downside protection,” such as retirement portfolios.”My best advice to baby boomers is put out some guarantees on their retirement portfolios.”George Kamel, financial expert”Recession or not, the best way to protect yourself financially is to live on less than you make, get out of debt (and stay out), and save three to six months of expenses for emergencies,” Kamel told Newsweek. “Economic downturns are unpredictable, but financial peace comes from having a solid plan—not reacting to headlines.”Regarding investing, he said that investors gain more from staying in the market over time rather than making rushed decisions.”The stock market will go up, and it will go down,” Kamel said. “But the only ones who get hurt on the roller coaster are the ones who jump off early.”History tells us that the market tends to rebound stronger than ever, often within just a year or two. Stay the course, keep investing, and don’t let fear drive your money decisions. “For lower-income families, Kamel—who is the author of Breaking Free From Broke and co-host of The Ramsey Show—stressed the need to focus on essentials such as food, utilities, housing and transportation.”Cut the extras, find ways to boost your income, and build up an emergency fund as fast as possible,” he said. “The less debt you have, the less stress you carry when times get tough—because debt is a thief, and in a recession, it steals your options.””The good news? You have more control than you think,” he added. “Own what you can control—your income, your spending, and your mindset—because no politician or economy can take that away from you.”Shannah Game, Certified Financial PlannerGame’s first piece of advice is “stack your cash cushion.””Recessions love to shake things up,” she told Newsweek. “Build a three to six month emergency fund now so you’re not scrambling later.”Regarding investments, diversifying a portfolio can spare individuals significant amounts anxiety, while handling high-interest debt—a “wealth killer”—should be a top priority.”Also, call your credit card company and ask them for an interest rate reduction,” she said. “This isn’t a guarantee, but if you have a good standing with the credit card company they might give you a yes.”Rather than going into “deprivation mode,” those trying to save money should “trim the fat, not the fun,” she said, advising people to set “weekly money dates” where they examine their expenses over the previous days.Everyone should also aim to “future-proof” their income by continuously upgrading their skills, expanding their network and exploring side jobs before they become necessary.Lower-income families, meanwhile, should focus on prioritizing essentials such as rent, food and utilities.”These come first. Everything else can be adjusted,” Game said. “You can always pause subscriptions and restart them when you have more cash flow.”This group should also try to capitalize on support programs wherever they can find them, such as government assistance, food banks and community support organizations.Game, author of Unraveling Your Relationship with Money, also emphasized the need to avoid financial anxiety.”Stress leads to impulse buys,” she said, urging people to mind their “mental wealth too.””Money anxiety is real. Create a plan, talk it out, and remember that your worth is not your bank balance.”
