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Just in Case – HumbleDollar

Where is the economy going, could there be a downturn? Could the job market weaken? Could you be out of a job? Read this full article at the link below for some great tips on preparing for what we hope doesn’t happen. Think of the strategy by Jonathan Clements as financial insurance.

The financial markets appear to think so. The stock and bond markets are suggesting that a recession could be in the offing. When I look around, I don’t see many signs of a U.S. economic slowdown. But it’s foolish to argue with the markets, which reflect the collective wisdom of all investors.

If the economy does indeed weaken, the big worry for many families won’t be the stock market. After all, only half of Americans even own stocks and stock funds. Instead, the top concern for most Americans will be the job market.

We’re now at 3.7% unemployment, down from 10% in October 2009. The Federal Reserve expects 2.5% real economic growth in 2019, with unemployment dropping even further, to 3.5%. Let’s hope the Fed is right.

But in case the folks there have it all wrong, there’s good news: You might have 12 months or more to prep your finances for rough times. How come? The stock market is a leading indicator: It starts falling before the economy contracts and it rallies before a recession is over.

By contrast, unemployment is a lagging indicator: Companies are slow to shed workers when the economy turns sluggish, though they’re also slow to rehire when economic growth resumes.

Worried you could lose your job in the next economic downturn? The obvious move is to stockpile cash. While that’s prudent, it shouldn’t necessarily be your top priority. Here are seven other things to do now:

Source: Just in Case – HumbleDollar

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