A week ago, the Wall Street Journal reported that the economy isn’t as bad as expected. They joined a host of other news outlets that seemed surprised that the new tariffs and other Trump policies had not resulted in inflation.
On Wednesday, the Commerce Department announced the economy grew at a 3 percent clip in the second quarter, with the GDP surpassing economists’ expectations and up since the first quarter.
Having just signed trade agreements with Japan and the European Union, both of which give the United States 15 percent tariffs on most imports from these critical trade partners, Trump is celebrating. Add in low unemployment, record stock markets—propelled by strong earnings from companies like Microsoft and META—and it seems like Trump and the economy are on a roll. But the housing market is still a pain point, interest rates are still high, and the deficit persists. I guess the improved 3 percent GDP growth shows that the country can keep growing, even when it is firing on only six or seven of its eight cylinders.
So what does this mean to you and me?
It Ain’t Over ‘Til the Fat Lady Sings
It means that while a recession is always possible, we are unlikely to see one in 2025.
However, unless Trump and his treasury and commerce team can figure out an almost mythical “soft landing,” it is inevitable there will be a downturn one day. But it doesn’t have to be today or even this year. It may not even be during Trump’s presidency. It depends on a wide variety of variables. A war, pandemic, or other major disaster, for example, could tilt us into a recession with no warning.
Today’s economy is like a high-strung horse. It can either win the race or throw its jockey, and there’s no way to tell when the latter will happen. We just have to hang on and cross our fingers that today is not the day. That means using periods of growth to get your financial house in order. Find a steady job unlikely to see you replaced by artificial intelligence. Start a side gig. Invest in something that generates income because having a steady income—as long as you don’t live beyond it—will give you a high degree of immunity when the next recession hits.
Don’t take the improving economy as a sign to spend like a drunken sailor or to start borrowing; both will come back to haunt you. Instead, make hay while the sun shines. Pay off some debt, buy assets rather than toys, sock away some cash for a rainy day, and make smart decisions.
The Bottom Line
Just as you have to be prepared for a natural disaster at any time, you need to be prepared for a financial disaster at any time. This could be your own personal financial disaster, such as getting laid off, or it could be a national one, such as a recession, stock market plunge, or currency collapse.
We saw inflation under Biden, and hyperinflation in other countries. We’ve also seen our government use tax policies to encourage or discourage specific behavior. On a global scale, we’ve seen financial sanctions used to punish countries. Most recently, we’ve seen Trump use tariffs to win concessions from trading partners. We’ve also seen wars pop up and pop off, wars that affect shipping, oil supplies and commerce. All of this should tell you that an economic upset could happen at any time for all sorts of unexpected reasons.
So be ready. Be prepped for a financial collapse, for a major stock market plunge, for bank holidays and bank controls, and for empty shelves. Having food, water and shelter are the basic preps, but you should also have some emergency cash, possibly some junk silver, and the ability to weather the storm if you lose your job.
Don’t Forget Long Term Financial Preparedness
While preparing financially for a job loss, recession or an economic collapse, your financial preparedness should also include life insurance for the primary wage earner(s) and retirement planning.
Sadly, people do get hit by buses, or gunned down in office buildings, stabbed in Walmart, or killed in car accidents. Your financial prepping should include enough life insurance to provide for those who depend on you. And while you are at it, make sure you have done your estate planning, including a will and possibly a trust. If you want a portion of your life insurance to pay for a child’s college education, for example, the best way to ensure that will happen is if you have a trust that includes those instructions.
In terms of retirement planning, a straight-forward, low-effort approach is to put as much money into your employer’s 401k or other tax-deferred savings plan as possible. (If you are self-employed, look into a Solo 401k or a SEP IRA.) These tax-deferred savings plans are an excellent way to save for your future, especially when your contribution is matched by your employer. Whether they match three percent or eight percent, it’s still free money; you would be a fool not to take it.
Compounding interest and a growing stock market are financial miracles that happen over time rather than overnight. Don’t waste time miss your opportunity to retire in comfort rather than in fear.
Multidisciplinary Preparedness
It’s only natural to start prepping by putting up some food and water. It can be fun to get guns, ammo and training and consider it prepping. While there may never come a day when you have to shoot raiders who are attacking your retreat, all of us face two future scenarios: retirement and/or death. Retirement planning, life insurance, and having an estate plan are the best ways to prepare for this end game.
There is no reason you cannot to both, or all. Prepare for war, pandemics, hurricanes, wildfires, earthquakes, volcanoes, cancer, car crashes, accidents, job loss, inflation, medical emergencies, death, retirement and whatever else you can think of. In fact, there may be more overlap than you think. Be a multidisciplinary prepper, and you’ll be better off than most.
Disclaimer: I am not a financial advisor, accountant, economist, tax professional, lawyer or an expert in retirement planning. I am simply a well-educated prepper relaying my personal beliefs established over more than 30 years of prepping and twice as much life experience. Do your own research and consider consulting a financial professional to assist you with your financial decisions, retirement planning, estate planning, and tax planning and preparation.
