While many feared a 2023 recession, it was largely avoided in the U.S. through aggressive interest rate hikes by the Federal Reserve (Fed) to cool inflation, combined with strong consumer spending, migration, and government support for key sectors like energy. For individuals, preparing involves building emergency funds, reducing high-interest debt, creating diversified income streams, and investing strategically in defensive sectors like healthcare and utilities, say experts.
One thing is certain: “There are policy tools we could use to stave off a recession for now, but we can't avoid recessions forever,” Herrington said. “We can make broad predictions based on past experiences, but it is incredibly difficult to say ahead of time exactly who will be affected and how.”
The threat of a U.S. recession remains alive in 2023. The consensus estimate on the probability of a meaningful downturn in the American economy in the next 12 months is at 65%, according to Goldman Sachs Research. But our own economic analysis rates that probability much lower, at 35%.
Falling growth, rising rents and punishing cost-of-living pressures made 2023 a “sluggish year” but Australia avoided a recession and there is room for optimism for 2024, Deloitte Access Economics says in its annual review.
While many experts warned of a recession for Australia in 2025 due to high inflation and interest rates, the economy largely avoided a major downturn, showing resilience with positive, albeit slower, GDP growth, low unemployment, and some signs of recovery by late 2025, though risks remained, particularly concerning household spending and global trade tensions. Forecasts from the Reserve Bank of Australia (RBA) and economists indicated a "slow grind" or modest improvement rather than a sharp crash, with some analysts predicting a potential for recession into 2026, but overall, Australia navigated the challenges better than initially feared.
Yes, Australians are facing significant financial struggles in 2025, with high cost of living, rising debt, and widespread financial insecurity, particularly impacting young people, renters, and lower-income families, leading many to feel worse off and struggle to meet basic expenses despite some economic indicators improving. Key issues include affordability of essentials (food, housing), increased use of Buy Now Pay Later (BNPL), and a general sentiment that financial health isn't improving, say reports from Monash University, SBS News, The Salvation Army Australia, The West Australian, Agile Market Intelligence, ASIC, The Guardian, Broker Daily, and Australian Broadcasting Corporation.
Defensive sectors like utilities and consumer staples often hold up better during downturns. Cash options like money markets or CDs offer stability but lower yields.
Lower prices — A recession often hits after a long period of sky-high consumer prices. At the onset of a recession, these prices suddenly drop, balancing out previous long inflationary costs. As a result, people on fixed incomes can benefit from new, lower prices, including real estate sales.
During a recession, a country's gross domestic product (GDP) may decline, and household spending may be seen to slow down. Businesses may slow down, causing incomes to stagnate, investment to drop, and people to lose jobs. Unemployment can rise, and retail sales and manufacturing can experience a decline.
The Most Important Recession Indicators You Need to Watch Right Now:
Even when the economy takes a downturn, certain industries will typically need workers, including:
You just don't know it yet. Elon Musk believes the global economy is already in a recession, and things are about to get a lot worse. He has recently made moves to curb working from home at Tesla, and has announced plans to layoff 10% of Tesla's salaried employees.
Still, several emerging markets in Asia didn't see any of the recessions that the rest of the world suffered through. Welcome to Vietnam: a country with a long history of avoiding recession. Indeed, they've managed to skip every single financial crisis for over 30 years.
Build up your emergency fund, pay off your high-interest debt, do what you can to live within your means, diversify your investments, invest for the long term, be honest with yourself about your risk tolerance, and keep an eye on your credit score. And don't forget to look for a side gig to keep money coming in.
His administration continued the banking bailout and auto industry rescue begun by the previous administration and immediately enacted an $800 billion stimulus program, the American Recovery and Reinvestment Act of 2009 (ARRA), which included a blend of additional spending and tax cuts.
You may want to shift some money into safer options like bonds or fixed income investments. Market storms can offer buying opportunities too. Stocks tend to drop during downturns—this creates discount prices for long-term investors.
Whether to sell your Australian house now or wait depends on your goals, but strong demand, low stock, and rising prices in many areas suggest a good time to sell, though some forecast a slowdown or shift in early 2025 before potential later growth driven by lower rates, making it a nuanced decision favoring acting sooner if upgrading, or waiting to capitalize on potential spring surges if timing allows, according to 2025 real estate analysis from OpenAgent and other sources, REMAX Success, and Real Estate.
Here are five smart moves to recession-proof your finances, before a storm hits.
It was not affected by the crisis from 2008 to 2009 due to a number of factors such as government stimulus spending of $11.8 billion, its proximity to the booming Chinese economy and the related mining boom kept growth ticking over throughout the worst of the global conditions.
Consumer staples
The 7% rule refers to a stop-loss strategy commonly used in position or swing trading. According to this rule, if a stock falls 7–8% below your purchase price, you should sell it immediately—no exceptions.
Healthcare Providers
Healthcare is one of the most recession-resistant industries. People still get sick or need medical care regardless of economic conditions. While elective procedures might decline, demand for essential medical services remains steady.
If you wanted to earn an average $3,000 per month, you would need to invest $1.6 million ($36,000 divided by 2.2%). While there is nothing wrong with passive investing, most investors are likely to do much better if they build their own investment portfolio.
During a recession, finances can be unpredictable, so it's important to spend wisely, avoid debt, continue saving and avoid making panic-driven decisions. With news of a possible recession coming, now is a good time to revisit your financial habits.
Index funds, ETFs, and mutual funds can all be great for easily diversifying a $1,000 investment. Target-date funds: Commonly used in 401(k) plans and other retirement savings accounts, these funds are managed by professionals to grow more conservative as you get closer to your retirement date.