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Many Saw the 2020 Recession Coming – But Are They Prepared? (Survey)


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It’s official: The longest bull run in the stock market is over. It’s pretty clear the coronavirus pandemic will lead to a global recession. How long it will last and how much damage will be done remains to be seen.

In 2019, long before COVID-19 was on the public radar, Money Crashers polled Americans to see when they believed the next recession would happen and what they believed would trigger it. It turns out that many people saw the collapse coming.

But does that mean they’re ready for one?

Many Americans Anticipated an Economic Recession

The bull market lasted 11 years. It was the longest streak of economic expansion in U.S. history. Unfortunately, that streak is over. The coronavirus has sent shockwaves through global markets and forced many businesses to shut down, while millions of workers are at risk of losing their jobs.

Did Americans see this coming?

At the end of 2019, Money Crashers asked them: How likely do you think it is that an economic recession will begin within the next 12 months?


The majority of Americans (53%) believed a recession was “very likely” or “likely.” Only 19% of respondents said they thought a recession within the next year was “unlikely” or “very unlikely.”

This would suggest they understand that economic expansions don’t last forever. Instead, the economy fluctuates between periods of growth and contraction. Ups and downs in employment, income, and spending levels are natural. And unfortunately, recessions strike eventually.

1 in 4 Believed a Destabilizing Event Would Trigger a Downturn

Many Americans saw a recession coming, but did they correctly guess what would trigger it? Here’s what we found.

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We distributed our survey only a few months ago. At the time, the trade war with China and the inverting yield curve were making the headlines. So we were surprised to discover the No. 1 choice was “destabilizing political or market event.” More than one in four Americans believed this was the greatest threat to the economy.

While it’s impossible to know what type of destabilizing event each person had in mind, COVID-19 would certainly classify as one. A government-mandated economic shutdown is an unprecedented black swan event.

The second most common selection was the trade war with China (19%), followed by U.S. government debt (10%) and declining consumer spending (9%). It’s not surprising that there was no unanimous choice. Even economists struggle to foresee economic declines. In fact, according to a 2019 survey by the National Association for Business Economics, only 38% of economists predicted a recession would begin in 2020.

Still, it’s clear that many Americans sensed a recession coming, whether or not they knew what would cause it. But does that mean they’re prepared to weather one?

Are Americans Prepared for a Recession?

It’s hard to know for certain if an awareness of a coming recession means people are better prepared for one. Economic data suggests more Americans have likely been preparing for an unexpected downturn than in the past. For example, the personal savings rate is more than double what it was in 2007 before the Great Recession, meaning people are more likely to be prepared for a rainy day.

Unfortunately, that likely won’t be enough. Many people will not have the financial cushion they need.

According to a report by the Federal Reserve in 2018, close to 40% of Americans would struggle to manage a $400 unexpected expense. Meanwhile, U.S household debt reached a new high — more than $14 trillion — at the end of 2019. That includes $1.5 trillion in outstanding student loans, $1.4 trillion in auto debt, and over $900 billion in credit card debt. It’s much harder for people to continue to make debt payments if they’re laid off, which can cause them to spiral into a financial hole or even bankruptcy.

Fortunately, the federal government is stepping in to provide relief to businesses and individuals. This includes measures such as up to $349 billion in loans to small businesses. Part of each loan will be forgiven if companies use the money to cover their payroll and don’t lay off any employees during the eight weeks following the loan’s origination. Furthermore, the coronavirus stimulus package will provide $1,200 to most U.S. adults. Parents will receive an additional $500 for each child who is 16 years old or younger.

The stimulus also expands unemployment insurance benefits. Those who lose their job will receive $600 per week on top of their state’s unemployment package. These benefits will be extended for 13 extra weeks and will even cover freelancers and independent contractors. So while the recession is predicted to be far-reaching, there is a significant safety net for those who lose their jobs and businesses affected by the pandemic.

Many Americans have lived through past recessions, including the 2008 financial crisis, the collapse of the dot-com bubble in 2001, and the Gulf War recession in 1990. For others, 2020 will be the first recession they experience. While there’s no denying that recessions are painful, these past periods can provide encouraging context: No downturn lasts forever. And the good news is a recession can also bring long-term economic benefits.

The Silver Lining of a Recession

Recessions are periods of fear and uncertainty. But they can also represent tremendous opportunities. Here are some silver linings to consider.

It’s a Good Time to Invest

Many financial assets become distressed and undervalued in a recession. People tend to sell their investments and flock to cash during times of uncertainty. This was the case during the subprime mortgage crisis of 2007 to 2009. Homes values dropped, which made it a great time to invest in residential real estate.

It can pay to zig when everyone else zags. As famed investor Warren Buffet wrote in a letter to shareholders in 1986, “Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community … Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

It Presents New Business Opportunities

Many great businesses have been born from the challenges of a recession. Disney, Microsoft, Apple, and AirBnB are examples. Although it may seem counterintuitive, recessions can actually be a great time to start a business. Suddenly, there is less competition, cheaper access to talented workers, and greater demand for new products and services.

Chris Kelly believes recessions can be one of the best times to launch a startup. The genesis behind his company, Convene, started from the problems that surfaced during the financial crisis in 2008. In a recent interview, he noted how he was able to identify a new business opportunity during an economic downturn.

“Large conference centers for Fortune 500 companies were simultaneously the most expensive type of real estate to own and operate and were also the least utilized. We ended up leasing existing prebuilt conference facilities off corporate balance sheets and then turning them into conference venues that were open to the public,” he said. “In frothy times, you have wasteful behavior. When the market dips, resourceful people can make sense of repurposing assets.”

Krista Neher started her company, Boot Camp Digital, during the peak of the Great Recession. She recommends not sitting back and expecting business as usual: “Even in a down economy, there are budgets, there are growing businesses, and there are opportunities. The key is to focus on those and move quickly instead of trying to do what worked before.”

In response to the coronavirus pandemic, many companies are transitioning to working remotely. This means new opportunities could develop for consulting firms that specialize in implementing systems and technology for remote work environments. In addition, there will likely be greater demand for services in “recession-proof” industries, such as mental health, child care, career counseling, online education, telemedicine, and e-commerce.

It Allows Companies to Strengthen Their Brand

The COVID-19 pandemic provides existing businesses with a unique opportunity to distinguish themselves. Anthony Carlton, a financial advisor at LearnLux, a software company that helps businesses support the financial wellness of employees, believes this is a defining moment.

“Companies across the globe are stepping up in a big way to help employees get through this mess,” he says. “That could include paid sick leave, emergency bonuses, help with remote-work setup, and other benefits like financial wellness. This is the time for employers to put their cash and resources to good use, which lets their teams know it’s about so much more than just a job.”

How companies respond during economic crises can determine how their brand is perceived by prospective employees and customers for years to come. It’s an opportunity for business owners to create a long-term competitive advantage.

It’s Cheaper to Borrow

If you’re able to maintain your income in a downturn, then you may be able to refinance your mortgage or other personal loans you’re paying back. During recessions, the Federal Reserve often cuts interest rates in order to encourage borrowing and investing. And that’s exactly what the Federal Reserve has done to dampen the economic blow of the coronavirus. When interest rates are lower, it’s an opportune time to refinance loans and reduce your monthly payments.

Tim Murray, an assistant professor of economics at Virginia Military Institute, notes that now is a good time for those with debt obligations to negotiate better loan terms.

“The rate on a 30 year fixed mortgage has fallen to 3.45%,” he says. “This is 0.82 percentage points lower today than one year ago in March 2019, and rates have dropped each month so far in 2020. While the economic situation as a result of COVID-19 is dire for some, with the aggressive action by the Federal Reserve, now is a great time to refinance a mortgage, car loan, or personal line of credit. This could be a great way to save money on interest payments each month, especially for families who have been financially impacted because of COVID-19.”

It Enforces Better Personal Finance Habits

When times are good, people are more relaxed with their spending and more likely to purchase things they don’t really need. Recessions force us to reevaluate our budgets and make smarter decisions with our money. They remind us how important it is to live below our means and cut out excess.

Because recessions are so difficult to anticipate, it’s especially important to be prepared for a recession by taking steps such as building an emergency fund, developing multiple income streams, and improving your employability. Economic downturns are out of your personal control, but there are ways you can limit the downsides and financial impact.

Recessions lead to high amounts of fear and speculation. However, these difficult periods can also open up new opportunities as people are forced to find creative solutions using limited resources. Recessions are painful, but they’re not permanent. And the setbacks they bring can help reinforce sound personal finance habits that last a lifetime.


This is the fifth report of a multipart series based on a survey of 1,017 adults conducted between July 7, 2019, and November 5, 2019, by Money Crashers. Responses were collected by sharing the survey on social media, email, and online forums and through Prolific’s panel services. For the analysis in this article, only responses from individuals who live in the United States (n=919) were considered. The participants were 48% male and 52% female.


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