Recession? What Recession?

Man in a suit grasping his head in confusion with question marks surrounding him

The possibility of a looming recession is prompting fresh worries for a lot of folks these days. According to a recent survey from MassMutual₁, 56% of Americans believe the country is already in a recession right now, while 49% think there will likely be a recession next year. 

You’re probably asking, are we or are we not in a recession? Well, believe it or not, this past summer a group of politicians, economists and market professionals actually engaged in debate of semantics over whether or not the U.S. economy was in recession. The argument came down to how you defined the word recession.

Get this, folks – according to the general definition—two consecutive quarters of negative gross domestic product (GDP)—the U.S. entered a recession in the summer of 2022. But some say it isn’t that simple. For example, an organization that defines U.S. business cycles, the National Bureau of Economic Research (NBER), takes a different view. According to their definition of recession—a significant decline in economic activity that is spread across the economy and that lasts more than a few months—we were not in a recession in the summer of 2022₂.

With our strong labor market and corporate earnings growth, they don’t believe we’ve entered an official recession. But at the end of the day, does it really matter how we define the challenging financial climate we’re dealing with? After all, the struggle is real for many of us, regardless of how we define the market stage we’re experiencing. 

I’ve had a number of discussions with clients about the possibility of a recession, and my advice is always the same – don’t worry about what the financial pundits say about it or how they define it. Instead, make sure your financial system is prepared for whatever comes our way. A careful and well-developed plan will anticipate a variety of possible market scenarios and have strategies to help you adapt without losing sleep at night.

This week, I’d like to dig into some steps you can take now to ward off any negative impact a downturn could have on your finances.

Let’s start with an easy one – getting rid of non-essential and unnecessary expenses. Consider areas where you can cut back without too much pain. Perhaps it’s reducing your subscriptions to streaming TV services. Maybe you spend a little more time in the kitchen trying some new recipes in order to cut back on food deliveries. An afternoon movie at the theater might be just as fun as an evening out, but you can usually get much cheaper tickets for daytime showings. And make sure you don’t go grocery shopping on an empty stomach, or you’re bound to some home with more than you planned to buy. Trust me on this one.

Take a hard look at where you spend money here. Even a modest savings can go a long way over time and help to beef up your savings. 

Once this step is complete, move on to your debts. With interest rates on the rise due to the Federal Reserve’s actions this year, the cost of your unpaid balances are likely increasing too. One idea is to consider finding a 0% interest rate transfer card if you have good credit, or possibly a low interest personal loan if you don’t. You might even have some luck asking your current credit card company for a lower interest rate.

And of course, be thoughtful about your use of credit. As a general rule, you don’t want to go into debt for something you can’t otherwise afford unless it’s an emergency. If you don’t have money left in your weekly budget for dinner out, for example, your best course of action might be to stay home to eat. That new coat you’ve been eyeing? Unless you’re without a coat for the season, think about how many months you’ll be paying it off, plus the accrued interest, before deciding if you really “need” it.

Remember the rules of good debt vs bad debt. Some debts can help you build a stronger financial future by maintaining or increasing your income, whereas other debts cost more than they’re worth, such as credit card debt, payday loans, or high interest or particularly long-term loans.

Another crucial task is to ensure you have an emergency fund. Having cash set aside in case of an emergency can help you weather those uncertainties without dipping into your retirement savings or taking on high interest debt. The last thing you want to do is go backwards with your retirement system, so make sure you have a cushion to better protect yourself. These funds shouldn’t be invested in the market where they can lose value. Rather, you’ll want them in a protected place where you can access them quickly and without penalty, such as in a money market or high yield savings account.

Folks, one of the most important steps is to review your investments. Now is not the time to let emotion guide your actions, because that could be a recipe for poor-decision making. For example, don’t interrupt your long-term strategy by stopping your contributions to your 401(k) plan or IRA. In fact, a market decline is often an opportune time to amp up your investments because you can buy shares at a cheaper price with the goal of watching them increase when the markets recover. 

Make sure to sit down and look at your retirement system with your spouse and your advisor. A good system will anticipate potential market challenges and have safeguards built in to minimize their effect. Do you have a downside risk management system in your plan? Should you? This may not be the time to have all of your investments in a buy and hold strategy that takes on all the market risk. Whatever we want to call this current economic climate, make sure you’re prepared with the information and tools you need for a grater chance of retirement success.

And as always – be vigilant and stay alert, because you deserve more!

Have a great week.

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA. 

Insurance offered through its affiliate, CutterInsure, Inc. We do not offer tax or legal advice. Jeff can be reached at This information is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain a better understanding of the subject of the article. Different types of investments involve varying degrees of risk, including the potential for loss. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Market data and other cited or linked-to content is based on generally available information and is believed to be reliable. Cutter Financial does not guarantee the performance of any investment or the accuracy of the information contained in this article. Cutter Financial will provide all prospective clients with a copy of Cutter Financial’s Form ADV 2A, Appendix 1, applicable Form ADV 2Bs and Form CRS as well as the firm privacy policy. Please contact us to request a free copy via .pdf or hardcopy. 1. 2. Ibid