Navigating Financial Uncertainty: What’s Happening, Why it Matters, and How to Prepare

It is very difficult not to turn on the news or social media and avoid the buzz, some of it is unsettling, about the state of the economy. Between rising concerns of a potential recession, increased mortgage stress, higher interest rates, and lingering high prices, it is understandable for people to be feeling a little bit uneasy. While it is important to stay informed, it’s just as important not to let fear dictate our financial planning and decision-making.

Let’s break down some of what is going on, why it matters, and — most importantly — what you can do to stay steady and even take advantage of uncertain times.

What’s Happening Right Now?

Several recent developments have caught the attention of economists, lenders, and everyday households:

• Recession Concerns: Goldman Sachs recently raised the probability of a U.S. recession in 2025 to 35%, up from 20%. This shift is tied to rising concerns over global trade tensions and interest rate policies. A lot is hinging on the Federal Reserve policy, and they seem to be holding steady with interest rates, not cutting them as expected. This can significantly impact growth, particularly in the stock market.

• Consumer Confidence: The Consumer Confidence Index dropped by 7.2 points, showing lasting concerns over inflation and policy uncertainty. This shows that people are uneasy about the immediate future, but other data shows long-term optimism.

• Mortgage Delinquencies Are Climbing: Mortgage rates have ticked back around the 7% range, increasing pressure on homeowners, especially those with adjustable rates. At the same time, consumer credit delinquencies have reached a five-year high, showing there is still financial strain for households.

Why This Matters

While a potential recession or economic slowdown isn’t a guarantee, the signs do point to a tighter financial condition for many Americans. Rising interest rates make borrowing more difficult, whether refinancing a home or carrying credit debt, or looking to buy a car. If delinquencies continue to rise, we could also see lenders starting to tighten credit access, making it harder to obtain loans or credit in the future. There are certainly things that we should be concerned about in the short term, but if you maintain a long-term plan, you can take steps to not only weather any potential storm but also come out of it in a strong position.

What Can the Average Person Do to Prepare?

Now let’s focus on what we can do to strengthen our financial foundation, not panicking. Here are a few key steps you can take right now:

1. Build or Replenish Your Emergency Fund
   Aim for 3-6 months of living expenses. If that sounds overwhelming, start small. Even $1000 can provide a helpful buffer against a sudden shift or event in life. We often point out to clients that “There are very few things in life where $1000 cannot at least start to get a solution.”

2. Review (and Trim) Your Budget
   Real Talk — It may be time to look for areas where you can cut back, especially on non-essentials, and redirect that money towards savings or debt repayment. A small, simple lifestyle shift now can prevent a major stress point later.

3. Pay Down High-Interest Debt
   There are two primary methods of debt repayment, the avalanche and the snowball. In times with high interest rates that could adjust upwards, paying off adjustable-rate debt (like credit cards) gives you breathing room and more money on hand.

4. Avoid Major New Debt
   Now may not be the best time to take on a new car loan or stretch for a home at the top of your budget. If you must borrow, lock in fixed rates where possible and make sure it is part of your trimmed budget.

5. Stay the Course with Investments
   Market dips are normal in economic downturns. If you’re investing for long-term goals like retirement or college, stick to the plan. You don’t need to panic sell based on headlines. If your foundations are solid, then you should be able to weather a storm and continue making progress towards these goals.

Opportunities Exist in Uncertain Times

Recessions aren’t just about survival, they can be a chance to make real progress. Here’s how:

• Lower Interest Rates (Eventually) If the Fed cuts rates, mortgage refinancing and borrowing will become cheaper again, opening the door for strategic moves.

• Job Market Shifts: Companies often restructure during economic downturns. It may be a time to upskill or pursue new opportunities that position you better for the recovery.

• Smart Investing: If you’re financially stable and investing for the long term, market dips can offer value buying opportunities. Think of it like a sale on your retirement portfolio.

Stay Calm, Stay Focused, Stay Informed

Uncertainty is part of the economic cycle. What matters most is how you respond. Let your goals, values, and a plan guide you rather than headlines and social media hype. If you’re not sure where to start or need help making a plan, a financial coach can help you build clarity, confidence, and a strategy, without judgment or jargon.

Want help navigating your finances during uncertain times? Reach out to schedule a free discovery session and learn how we can support you!