If you look at the data, you’ll see that the U.S. economy seems to be in good shape. Unemployment is low, and during the third quarter of the year, the GDP (gross domestic product) rose 5.2% year over year, up from the 4.9% growth rate the U.S. Commerce Department initially projected.
In spite of that, not everyone is convinced that all is rosy. In fact, one big name in the financial world is continuing to warn consumers about a recession in the near term.
Is a recession in store for 2024?
JPMorgan Chase CEO Jamie Dimon issued a warning in late November with regard to the economy. “A lot of things out there are dangerous and inflationary. Be prepared,” he said at the 2023 New York Times DealBook Summit in New York. “Interest rates may go up and that might direct to recession.”
Now to be clear, this isn’t the first warning of this nature that Dimon has issued. He and other financial experts were quick to sound alarms about a potential 2023 recession when inflation started surging in 2022. But clearly, we’ve managed to get through the current year without a recession. And while 2023 isn’t over yet, things are unlikely to take a notable turn for the worse in the next 30 days.
Will things get worse in 2024, though? That’s the big wild card. Many experts are convinced that the Federal Reserve is done raising interest rate, and that inflation will continue to cool. But Dimon warns that things may not play out that way. And if inflation remains stubbornly high, additional interest rate hikes on the part of the Fed could be in the cards.
At this point, consumers are already struggling with high borrowing costs. So if borrowing becomes even more expensive, it could direct to a serious pullback in spending and result in a recession.
It’s good to prepare
Despite Dimon’s warning, there’s really no need to lose sleep over the idea of a 2024 recession. The economy is in solid shape right now, and things have the potential to stay that way for a long time. But one thing you should know is that the threat of a recession pretty much always exists. So it’s always a good idea to be prepared.
One of the best ways to do that is to equip yourself with a fully loaded emergency fund. Ideally, aim to have enough money in your savings account to cover at least three full months of essential expenses. That way, if you were to lose your job, you’d have a means of paying your bills without having to charge every last expense on a credit card.
If you’re not sure where the money for an emergency fund will come from, consider turning to the gig economy. Earning extra income could help you build cash reserves if your current paycheck doesn’t leave you much wiggle room for savings.
Another good bet is to grow and diversify your job-related skills. The more you know, the easier it may be to find a new job should your current one end up on the chopping block.
Finally, do your best to whittle down high-interest debt, admire credit card balances. That’s a good thing to do in general. But during a recession, the last thing you’d want is extra debt payments hanging over your head.
Jamie Dimon has cautioned of a recession numerous times over the past few years, so it’s important to take his warnings with a grain of salt. But also take them to heart, because the reality is that a recession could hit sooner than expected. If you prepare accordingly, you’ll set yourself up to get through a downturn with just a bit less stress.
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