We've Reached September With No Recession. Are We in the Clear for 2023?

"Prepare for a 2023 recession." These were the words so many economists were uttering in 2022 and the first half of the current year.

Yet we've made it to September, and clearly, a recession hasn't hit. Unemployment levels are still low, jobs are still available, and things are generally looking pretty stable.

At this point, economic data is not pointing to a near-term recession. And financial experts are therefore changing their tune.

Bank of America U.S. Economist Michael Gapen said in August, "We have revised higher our outlook for growth in economic activity this year and next, and no longer expect the economy to fall into a mild recession." And around that same time, Federal Reserve Chair Jerome Powell said that the central bank staff no longer anticipates a recession in 2023.

Clearly, this is all positive news. But it's also not news to get overly comfortable with.

A recession is bound to strike eventually

It's easy to think of a recession as a really scary period of economic decline. But actually, recessions tend to just happen from time to time, and they're not always so monumental. Some are mild and have minimal impacts, while others are more notable but also short-lived.

While it's pretty unlikely that we'll enter a recession in 2023, the reality is that the economy is likely to fall into an extended slump at some point. Maybe that won't happen in 2024, either. But could it happen in 2025? Perhaps. That's why it's so important to be recession-ready at all times.

How to make sure you're ready for the next recession

We don't know when the next recession is going to hit. But if you want to make sure you're prepared, have at least a three-month emergency fund saved up. That means having enough money in your savings account to cover three months of essential expenses. So if your non-negotiable bills like rent, transportation, utilities, and food come to $2,500 a month, you'd ideally want a $7,500 savings balance.

If you don't have much in the way of savings now, you can do your best to build it up over time. That could mean saving $50 this month, $75 the next month, and $100 the month after that.

And if you can't get to a three-month emergency fund, so be it. But if that's the case, try to save as much as you can so that if you were to lose your job, you'd have a way to pay your bills without having to immediately resort to credit card debt.

And speaking of that, shedding credit card debt can be a helpful thing ahead of a recession. If economic conditions decline and you're out of work, the last thing you'd want is another monthly payment you're on the hook for.

Plus, credit cards are notorious for charging high interest rates. The less you're forced to spend on interest, the more you can potentially save.

We may have avoided a recession in 2023. But that doesn't mean you won't experience one at some point in your lifetime. Quite the contrary -- you're more likely than not to have to deal with a recession eventually, so the more you prepare ahead of time, the less stressful it'll be.