White House Economist Insists Recession is Not inevitable

What Happened: White House economist Jared Bernstein told Yahoo Finance that the U.S. can avoid entering a recession next year. "A recession is not inevitable," he said. "I think there are reasons to be optimistic that the path to a steady and stable transition is plausible and credible." 

So What: Bernstein's cautious optimism flies in the face of the recession warnings we've been hearing from a number of top bankers and economists for several months. His words coincide with reports that inflation may be cooling, which could provide some relief for Americans' bank account balances.

Recessions are often accompanied by job losses and a heavy recession could mean financial difficulties for millions of Americans. Bernstein's hope is that economic growth will slow, but not so dramatically that it triggers high unemployment and a severe economic downturn. 

Now What: Economists and politicians will likely go back and forth on the likelihood of a recession until it either arrives or we reach clear economic waters. Following what was an unprecedented pandemic, it's difficult for any of them to really know what might happen next. However, from a financial perspective, the moves you'd make to prepare for a recession will stand you in good stead regardless.

If you don't have three to six months' worth of living expenses socked away in a savings account, set this as a top financial goal for next year. If a recession does strike, that cash will cushion you against job loss. If it doesn't, that money could see you through other financial emergencies, such as a medical crisis or unexpected car repairs.

If you're carrying high interest debt, paying it down will strengthen your financial foundations in the long run. Not only could it increase your credit score, it will also mean you aren't losing a chunk of your income to cover debt repayments each month. If we do enter a recession, the less debt you have weighing you down, the better -- particularly if interest rates continue to rise.