Experts and everyday Americans predict that an economic downturn is looming. According to a survey conducted by the National Association for Business Economics, 35% of professional forecasters said it was probable that the U.S. would enter into a recession in the middle of 2020. The responses of a separate survey released by Bankrate revealed that 20% of Americans feel that the country is already in a recession, and 15% believe one will begin within the next year or two.
Increased Debt After Last Economic Downturn
With the economic outlook appearing glum, the financial stability of households that are barely recovering from the Great Recession is threatened. During the financial crisis of a decade ago, many families took on new and higher debt to survive lost jobs, lost wages, and increased expenses. Even today, many people are getting loans for education, houses, and cars; they are also amassing more credit card debt.
In a poll of over 2,800 Americans, SurveyMonkey, collaborating with CNBC and Acorns, found that although about 30% of people have curbed their spending in 2019, 17% have acquired new debt.
A Looming Recession and a Cycle of Financial Instability
An impending financial downturn would have substantial effects on many working-class families. As of March of 2019, on average, they owed about $33,000 in debt, which is over $6,000 higher than it was in June of 2009. With increased debt and slow wage growth over the past 12 months, many Americans feel they would struggle should another recession hit. YouGov surveyed over 24,000 adults and found that 43% don’t believe they are financially secure, and 71% are not ready for a financial crisis, such as losing a home or going bankrupt.
When the next recession hits, which could result in job loss, those with high debt now may struggle to pay their monthly expenses, creating a cycle of financial instability. Unable to afford payments, they might default on loans, affecting their credit, and in turn, resulting in higher interest rates (or an inability to qualify) for future loans. An already fragile market could then be weakened even more because of consumers’ inability to remain current on debt.
Get Legal Representation from RJB Law Offices
If you are struggling with managing debt, our team is ready to provide the legal guidance you need. We have over 20 years of experience in bankruptcy law and can help with your financial matters. Our attorneys take the time to understand your goals and will work hard to find a debt relief option for your specific situation.
To schedule a free consultation, call us at (888) 256-8581 or contact us online.