To recession or not to recession: That is the question.
Whether ‘tis nobler to hunker down in the heart of Colorado or the suburbs of Seattle is exactly what Smartasset set out to do. We can’t predict the future, but we can use past trends to narrow down which U.S. cities have historically withstood recessions the best.
So, Smartasset took a deep dive into 429 cities to see how their housing, social assistance, employment, and economies stood up to long-term negative financial byproducts of recessions from years past.
Unfortunately, the study found that about 1 in 3 Americans live below the poverty line. (If you’re among this lot, you may want to find a fiduciary financial advisor using SmartAsset’s free tool to help get your finances back in shape.) Jackson, Mississippi, and San Marcos, Texas have some of the most Americans struggling to afford necessities even today. Western cities were likely to fare the best, whereas Floridians were among those affected the most by a potential recession.
So, which American cities are likely to fare the best during the next American recession? Let’s take a look (Rankings are out of 429, with 429 being the worst city to pull through a recession. You can find more about Smartasset’s ratings on their study page):
1. Castle Rock, Colorado
- Employment Rank: 10
- Housing Rank: 7
- Social Assistance Rank: 3
- Economic Stability Rank: 141
2. Highlands Ranch, Colorado
- Employment Rank: 22
- Housing Rank: 6
- Social Assistance Rank: 4
- Economic Stability Rank: 133
3. Overland Park, Kansas
- Employment Rank: 39
- Housing Rank: 23
- Social Assistance Rank: 17
- Economic Stability Rank: 22
4. Kirkland, Washington
- Employment Rank: 70
- Housing Rank: 19
- Social Assistance Rank: 44
- Economic Stability Rank: 2
5. San Mateo, California
- Employment Rank: 71
- Housing Rank: 37
- Social Assistance Rank: 12
- Economic Stability Rank: 18
And on the opposite end of the scale, these cities are likely to fare the worst during another American recession:
425. Rockford, Illinois
- Employment Rank: 423
- Housing Rank: 414
- Social Assistance Rank: 333
- Economic Stability Rank: 378
426. Reading, Pennsylvania
- Employment Rank: 357
- Housing Rank: 402
- Social Assistance Rank: 423
- Economic Stability Rank: 387
427. Pasadena, Texas
- Employment Rank: 343
- Housing Rank: 379
- Social Assistance Rank: 425
- Economic Stability Rank: 414
428. Augusta, Georgia
- Employment Rank: 355
- Housing Rank: 410
- Social Assistance Rank: 407
- Economic Stability Rank: 427
429. Camden, New Jersey
- Employment Rank: 394
- Housing Rank:407
- Social Assistance Rank: 416
- Economic Stability Rank: 403
Worried about your economic footing? Luckily, there are steps you can take today to help yourself:
1. Start prepping now: There are steps you can take now to recession-proof your budget. For instance, make sure you have a bulky emergency fund, and consider taking on a secondary income stream.
2. Study up: There are a plethora of guides on how to survive a recession. These guides can help you find ways to save, such as cutting out unnecessary spending, and how best to use that savings during a recession.
3. Consult the pros: Finding a financial advisor could be a wise investment for your future. You can get matched with a fiduciary financial advisor in just five minutes. An advisor could help you make smarter money moves and make sure the only potential move from the American middle class you make is upwards, not downwards. (Sponsored)
4. Learn from the past: Do you know how long the average American recession lasts? Do you even know when the last recession was? Take a few minutes out of your day to learn about America’s history with recessions to help you avoid making the same mistakes of Americans’ past.
Still not feeling secure about your ability to pull through a recession? A fiduciary financial advisor could help you. Get matched with up to three local fiduciary financial advisors in just five minutes. These advisors have been vetted and all uphold the fiduciary standard to work in your best interests.
Ready to get matched and make sure you’re prepared for a recession? Get started now to reach your financial goals (Sponsored).
This article was produced and syndicated by MediaFeed.org.
Your complete guide to surviving a recession
Recession warnings are everywhere. With interest rates rising, inflation hitting the highest levels in 40 years, and stocks plunging into bear market territory, most people are more than a little worried. Let’s face it, many of us are feeling the pain of the current economy every time we fill the tank, stock the fridge, or check our 401(k) balance.
But the reality is that, whether or not they fit the technical definition of a recession, these types of downturns are a normal (albeit painful) reality of economic cycles. When they happen, one of the most productive responses is to turn worry into action. Building a fortress around your finances can protect against tough times and put you in a better position when the economy bounces back.
So exactly what to do in a recession? These five steps can help you prepare for any type of economic slowdown, now and in the future.
Recommended: What is a Recession and Why Do They Happen?
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Dramatic price increases across the board have already forced many consumers to cut back on their budget for basic living expenses such as groceries and travel. Now is also a good time to review bank and credit card statements to find other cost-cutting opportunities.
Maybe those streaming services that were a lifeline during COVID aren’t necessary any more. Or, it might make sense to put off some of those home improvements you were considering, keeping the equity in your home intact should you need it during the slowdown.
Revamping your budget can help you handle today’s higher prices and also help free up a few dollars for steps 2 and 3 below.
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Hard as it may be to find extra cash right now, it’s important to make sure you are putting something aside for unexpected expenses. Don’t feel overwhelmed by the advice saying you should aim for three to six months’ worth of living expenses. Saving that much right now may sound more discouraging than helpful, especially for people who saw their emergency funds dwindle during the pandemic. Keep in mind, anything you can save (even $25 a month) is good, and even small weekly deposits add up over time. Whatever you can afford, know that it’s worthwhile to prioritize emergency funds.
With emergency savings, you may get to take advantage of one of the few benefits of rising interest rates. Savings accounts may begin to pay more interest soon. What kind of savings account should you get? You might look for high-interest accounts offered by online banks as they often pay more than bricks-and-mortar financial institutions. Your goal, of course, is to get the best rate. If you are employed full time, check with your benefits department to see if any emergency savings programs are available through your work. Having some cash in the bank can be a key step when you are wondering how to handle a recession. It can be a hugely helpful safety net.
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Here’s the bad news about higher interest rates. The national average credit card rate rose above 17% for the first time in more than two years, according to a recent weekly rate report. The jump happened after the Federal Reserve increased interest rates. More rate hikes are expected throughout the year.
Check rates on all of your credit cards and other debts. Any variable rates may have already gone up. Next step? Pay as much as you can on your highest interest rate balances first to whittle down that debt; it’s the kind that can unfortunately snowball during tough economic times.
You might also look into balance transfer credit card offers. They can offer a period of no or low interest, during which you can pay down that debt. Another option is finding out how debt consolidation programs work.
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The current economic turmoil hits just as federal student loan repayments are set to begin again in September, after a more than two-year reprieve during the COVID-19 pandemic. Another extension is expected (and hoped for by many) but has not been announced. Nonetheless, payments are likely to start again sometime.
If you’ve taken advantage of the pause, this is the time to get ready for repayment, whenever it comes. Contact the servicers of your federal student loans to make sure you know the monthly payment due date and other details that you may have forgotten or that may have changed during the pause.
If you’re worried about affording repayments, look into alternatives. Forbearance, for example, allows a qualified borrower to suspend federal student debt payments for a period of time, although interest continues to accrue. Government-sponsored income-driven repayment programs are another option. They cap monthly loan payments at a percentage of what is defined as discretionary income. Still other borrowers may find refinancing student loans through a private lender can be an affordable option. It can be worthwhile to do the research to find out what exactly your options are to stay current on your loans.
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When it comes to your long-term investments such as 401(k)s and other retirement accounts, the key to surviving a down market is simple: Hold tight. Nothing good is likely to happen when you sell in a panic. Not only do you risk selling at a loss, but you’ll miss out when the market rebounds, as it inevitably does.
Take a look at the most recent downturn. The Standard & Poor’s stock market index plunged almost 31% in March 2020 when Covid first hit. Then the index almost doubled just a year later. Investors who sold in a panic didn’t see any of those record-breaking returns.
If rising expenses are making it impossible for you to keep up with 401(k) contributions, you may want to try to deposit the minimum necessary to get any matching funds your employer offers. That’s free money, and you don’t want to miss out.
Also try to avoid making any withdrawals from your retirement accounts. In most cases, if you’re younger than 59 ½, you’ll pay a 10% penalty plus taxes.
Even more important, a chunk of your money won’t be there to see the growth in your long-term savings account when the market rebounds.
SARINYAPINNGAM/iStock
Most recessions include high unemployment and mass layoffs. This slowdown is a little different. So far, the unusually strong labor market has protected the U.S. from rising unemployment, contributing to the one bright spot in the U.S. economy. Wages have also increased, but generally not enough to offset the current record inflation.
Economists warn the strong employment market may not last. That’s something to be ready for, especially if you work in an industry that typically suffers downturns in a recession. And employees who may be counting on finding a higher-paying position in this strong job market may find their window for doing so is closing. What’s more, in a worst-case scenario, some people could find themselves figuring out how to apply for unemployment.
Reducing debt and building emergency savings, as mentioned above, are two important steps you can take to prepare for the financial shock of a layoff. In addition, this is a good time to work to recession-proof your career: Update your resume, boost your network, and get the extra education, skills or training you may need to protect your livelihood.
Check out our Recession Survival Guide to learn more about living through a recession.
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Economic downturns are never pleasant and often painful. But with some thoughtful planning and the steps outlined above, you can protect your finances and better position yourself when the economy bounces back.
Learn More:
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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