Column: Some tips for dealing with coming recession

The signs of a coming recession are all around us. First, the stock market has fallen since President Joe Biden took office. It is the worst performance of the stock market during the first two years of a presidency since Jimmy Carter's disastrous term in office over 40 years ago.

There were no 401(k) retirement plans when Jimmy Carter was president, so relatively few working-class households were invested in the stock market. But a recent Gallup poll found that 58% of American adults are now invested in the stock market. And they feel less wealthy when stock prices fall, so they will spend less, contributing to an economic slowdown.

When Biden first took office, the economy was rapidly recovering from the pandemic shutdown, and the stock market rose to reflect this rebound. But wasteful government spending and restrictions on fossil fuels reversed the direction of the economy. The S&P 500 actually rose 27% in 2021, but the decline during 2022 has been steep.

The stock market downturn reflects the collective judgment of millions of investors that there will be an economic recession in the next 6-12 months. Lately, the stock market has recovered a little, so maybe the recession will be mild. That would be what economists call a "soft landing" of the economy.

President Biden and Treasury Secretary Janet Yellen downplay the chances of an economic downturn because admitting that a recession is likely would be a self-fulfilling prophesy. But the cure for high inflation is a recession. The Federal Reserve is raising interest rates to slow down spending on large ticket items like cars and houses, which will dampen demand for goods and services to slow down inflation. The best possible outcome would be a very mild recession.

The economy has been struggling during 2022 in what is best described as "stagflation," which is a combination of high inflation with stagnant economic growth. The gross domestic product, or GDP, fell a little during the first two quarters of 2022, which is the classic definition of a recession. However, the GDP rose slightly in the third quarter. But these fluctuations were mainly due to changes in inventories and foreign trade balances rather than in levels of domestic economic activity.

The economy is not in a real recession because the job market is still strong. The unemployment rate is relatively low, and job openings are high. But large companies have begun reducing their workforces. Amazon, Facebook/Meta, Twitter, Peloton and Ford have all recently announced layoffs. Even Walmart has announced layoffs at its corporate offices and at an Atlanta-area fulfillment center.

How should one prepare for an economic recession? Look for ways to cut spending. Do you really need so many streaming services? Can you change plans to reduce the costs of your phone service?

Put off large purchases. Use your smart phone for another year. Maybe you can nurse your car along for a while longer. Cut back on eating out by brown bagging. Pay down credit card balances and put some money in the bank for emergencies. Vacation locally; the Outer Banks are a good day trip.

If you have a good job, hold on to it. Otherwise, find a good job while there are lots of job openings. Many people are finding second jobs or side gigs to deal with the higher cost of living. DoorDash, Instacart, Uber and Uber Eats are popular in this area. And retail stores will hire some seasonal help.

Hopefully, the recession will not last long and will be mild. So prepare for the worst, and hope for the best.

Michael R. Worthington is an unaffiliated voter living in Pasquotank County