McCarthy Firing Could Lead to a Recession — 3 Ways To Protect Yourself Now
Written by
Cindy Lamothe
Edited by
Cory Dudak
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The conflicts among Washington politicians have grown more intense in recent days, even as the importance of the issues at hand reaches its peak.
Disagreements on Capitol Hill carry significant repercussions, and the most recent dispute may result in another credit downgrade, posing a severe threat to the stability of the US economy. Here’s why Kevin McCarthy’s firing could lead to a recession.
Quarrels between the two parties over the summer nearly led to the country defaulting on its debt for the first time since the nation was founded almost 250 years ago. Then, in a historic vote on Oct 3, hard-line Republicans led by Florida Rep. Matt Gaetz ousted McCarthy as Speaker of the House.
This intensifying political polarization has caused Moody’s Investors Service to take note. Moody’s is one of the leading credit rating agencies in the world, serving as an evaluation of the creditworthiness and financial stability of different entities. Recently, they warned a government shutdown could prompt it to downgrade US debt.
Below are some ways to protect yourself now in case of a possible recession.
Build an Emergency Fund
Bulking up your cash reserves is key to navigating an economic downturn. Having cash on hand provides a financial cushion and liquidity to weather the storm and navigate unexpected expenses or income disruptions. To protect yourself, try to build up the recommended six to nine-month rainy day reserve.
Resist Stressing Over Your Portfolio
While our first inclination during a possible threat is to make immediate investing moves, experts believe it’s best to stick with the market ups and downs. “Those who panic and sell ‘at the bottom’ often regret it because trying to time the market can result in losses that are very difficult to regain because stock prices can change quickly,” said Linda Davis Taylor, a seasoned investment professional.
Diversify Your Income Streams Now
Just as you’d seek to diversify your investments, diversifying your income streams is one of the best ways to protect yourself against a recession. A side gig helps reduce the income volatility and stress that can come with a job loss. There are a myriad of “side hustles” or opportunities to find a second income online — all you have to do is start looking.
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