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The term “Trumpcession” has been popping up in headlines this week, as economists and market watchers debate whether President Trump’s economic policies could trigger a downturn. But are we actually in a recession right now? Not technically — at least not yet.
When identifying a recession, economists typically look for two consecutive quarters of negative gross domestic product (GDP) growth. While the U.S. economy shrank 0.3% in the first quarter of 2025, most experts agree that the trend will need to continue before we’re officially in a recession.
But waiting for official confirmation before taking steps to safeguard your money isn’t a smart financial strategy. As a certified financial planner, I’ve seen how early preparation can affect your financial choices during economic uncertainty. So if you’re wondering how to protect your money, here’s what you should know.
Is a “Trumpcession” really coming?
Right now, no one really knows. While we’ve seen some positive economic indicators — like April’s better-than-expected jobs report — other metrics suggest a less rosy outlook. For example, the odds of the U.S. economy entering a recession by March 2026 have risen to 36 percent, up from 26 percent in the fourth quarter of 2024, according to Bankrate’s latest Economic Indicator Poll. Consumer sentiment has plummeted to its lowest level since the COVID-19 pandemic, according to the University of Michigan consumer sentiment index.
The current economic anxiety stems largely from the administration’s aggressive trade policies that began in April 2025. These include a baseline 10 percent tariff on imports from all countries, with higher rates for nations where the U.S. has large trade deficits.
Should you be concerned about bank safety?
Your money in the bank remains safe during economic uncertainty. Deposits in Federal Deposit Insurance Corp. (FDIC)-insured banks or National Credit Union Administration (NCUA)-insured credit unions are protected up to $250,000 per depositor, per institution and per ownership category.
The real concern isn’t bank safety but potentially shrinking returns. During economic downturns, interest rates typically fall as the Federal Reserve tries to stimulate spending. This creates a mixed bag for your money — potentially lower mortgage rates, but also reduced returns on your savings accounts, certificates of deposits (CDs) and money market accounts. This can particularly impact savers who rely on interest income.
Banking moves to make right now
1. Diversify your accounts
Think of your cash like a sports team — you need players with different strengths. Instead of keeping everything in one account, consider spreading your money across these options:
- High-yield savings accounts: Online banks typically run leaner operations and pass those savings to you via better rates. Even when rates fall, they usually maintain an edge over traditional banks. So, if you’re keeping your money in a low-yield account, you could be missing out on hundreds (or more) of interest.
- CD ladders: If you’re worried rates will drop further, lock in today’s competitive rates with a certificate of deposit. You can create a CD ladder by dividing your money across CDs of different terms, like 3-month, 6-month, 9-month and 12-month CDs. When each shorter-term CD matures, you can reassess whether to use the cash or reinvest it.
- Money market accounts: These hybrid savings accounts often come with check-writing privileges alongside competitive yields. They’re great for that portion of your emergency fund you hope not to touch but may need occasionally.
2. Beef up your emergency fund
I typically recommend keeping three to six months’ of essential expenses in emergency savings, but these aren’t typical times. Consider expanding that amount if:
- Your industry is sensitive to economic fluctuations.
- Your household relies primarily on one income.
- You have variable income.
- You’re self-employed or a small business owner.
Keep this money readily accessible, even if that means accepting slightly lower returns. Remember, the goal here is security, not growth.
3. Don’t chase yields into risky territory
When bank rates fall, I see too many people making dangerous moves chasing higher returns. That 7 percent yield might look enticing until you realize it’s not federally insured and could vanish along with your principal.
Stay disciplined. Your cash reserves serve a specific purpose — safety and accessibility during uncertain times. This isn’t the money you’re trying to grow aggressively.
4. Assess your debt strategy
Economic uncertainty also calls for a strategic approach to what you owe:
- Refinance fixed-rate loans sooner rather than later: Don’t play the waiting game hoping rates will drop further during a recession. Lending standards typically tighten during downturns, making it harder to qualify for favorable terms. If you have good credit now, take advantage of it.
- Think twice about variable-rate anything: That adjustable-rate mortgage might look attractive with its low initial rate, but remember that rates typically hit bottom during recessions before climbing during recovery. That teaser rate could become a burden just when your finances are stabilizing.
- Crush high-interest debt: Credit card interest rates hover around 20 percent in today’s environment. So every dollar you pay toward that high-interest credit card debt gives you guaranteed savings equal to your interest rate.
Bottom line
Despite the alarming headlines, remember that economic cycles are normal, and recessions — even when they materialize — eventually end. The best approach to managing your finances isn’t to predict the exact timing of good or bad economic news but to prepare your finances to weather whatever comes.
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