Mark Hauser Discusses Strategies for Navigating an Economic Downturn

Mark Hauser, experienced financial services professional, discusses various strategies
for successfully navigating an economic downturn.
In summer 2022, many United States economists endlessly debate on whether the
country has officially entered a recession. Even if that’s not yet true, most financial
experts say the country’s economy is certainly headed for a collective downturn.
Historically, economic slowdowns have led consumers to minimize spending to
conserve their valuable cash. In turn, businesses reduced prices and expenses while
pausing capital projects and upgrades. Taken together, these actions served to further
shrink the economy. Stated another way, it’s a self-fulfilling prophecy.
With this scenario as a backdrop, private equity principal Mark Hauser recommends
that consumers take steps to get their financial houses in order. Priorities should
include bolstering their emergency funds, reducing high-interest debt, and re-evaluating
investments’ asset allocations, among other goals.

Recession vs Economic Downturn
The National Bureau of Economic Research (or NBER) says a recession is triggered by
two back-to-back quarters of negative economic growth. This growth is typically
measured by the country’s gross domestic product (or GDP). Collectively, the GDP
represents the total value of all marketable goods and services produced during a
certain period.
In late July 2022, the United States Commerce Department released the second-quarter
GDP figure. From April through June, the United States’ economic growth shrank 0.9
percent. From January through March, the GDP had already fallen 1.6 percent.
Additional signs of a downturn often include higher unemployment and a softening
housing market.
Even with these telltale figures, the NBER won’t confirm a recession. The agency says it
needs to examine additional data to make that determination. Specifically, the NBER
considers the depth of an economic decline along with consumer spending trends.
Regardless of economists’ views on a recession, they generally agree that the United
States is headed for an economic downturn. In the biggest indicator, the Federal
Reserve is aggressively (and consistently) raising interest rates to blunt inflation.
However, there’s a good chance the economy will cool too much, setting the stage for a
6 Strategies for Negotiating an Economic Downturn
Consumers may be faced with certain financial challenges during the coming months.
The Federal Reserve’s actions may trigger some consequences while others will take
place for other reasons. As Mark Hauser notes, careful preparation, a concrete strategy,
and perhaps professional advice will enable consumers to successfully navigate the
Perform Monthly Budget Reviews
In the face of higher consumer prices, a potential job loss, and general economic
uncertainty, reducing expenses is a smart strategic move. However, a casual attitude
toward expense reduction will probably not get the desired results.
Instead, conduct a ruthless monthly budget review. Identify all areas that can benefit
from expense reductions. Examples include restaurant meals, pricey snacks and
beverages, and name-brand groceries. Curtailing shopping splurges will also be useful.

For maximum benefit, everyone in the household (including teens) should be involved in
this cooperative effort.
Manage Higher Interest Rates
As the Federal Reserve continues its aggressive interest rate hikes, borrowing costs will
continue to rise across the board. Mortgage rates are considerably higher compared to
2021’s numbers. Car loans, personal loans, and business loans will likewise carry higher
interest rates. Adjustable (or variable) interest rates will also continue to rise,
emphasizes Mark Hauser. This makes it harder for consumers and businesses to pay
off debts.
Therefore, it may be appropriate to ask lenders and card-issuing banks about lower-
interest credit vehicles. Consolidating or refinancing debts into a single-interest loan
could also make sense. If possible, borrowers should also pay off variable-rate debts.
Before entering into a new financial agreement, borrowers should ensure the revised
agreement will actually save them money. Consumers should be wary of “too good to
be true” offers that may contain undesirable fine print. Having an attorney review
questionable agreements is always a good course of action.
Adopt Proactive Layoff Tactics
With a currently low unemployment rate, the labor market may appear to be relatively
stable. However, several high-profile national companies have recently announced
layoffs. Inflation, lower consumer demand, and rising interest rates were likely behind
the job cuts. It’s logical to assume that these layoff trends could extend to other
businesses in multiple industries.
While stable income is available, consumers worried about layoffs should consider
diverting more money to their emergency funds. At the very least, workers concerned
about job losses should build their skills, update their resumes, and cultivate
relationships with influential people in their industry. Networking with other business
colleagues can also uncover news of emerging opportunities. If a layoff does occur,
workers should immediately file for unemployment and ensure they have health
insurance in place.
Self-employed individuals should look for a new revenue stream or add a new market
for an existing product. Postponing an expansion or other large expenditure may also
make sense. Adding to cash reserves is always a good option, as more on-hand capital
means a broader selection of choices.

Create an Extra Income Stream (or Two)
Employees concerned about layoffs, and budget-crunched consumers who want some
breathing room, should add another income stream. In today’s digital world, many
online freelance opportunities are available. Building a side business or adding a part-
time job can also supplement the household income.
Pay Down (or Pay Off) High-Interest Debt
If possible, borrowers should increase payments to their highest-interest credit cards
and/or loans. Paying off these liabilities will offer flexibility that will likely be needed
when financial challenges arise.
Private equity expert Mark Hauser says working with a Certified Financial Planner may
be useful. This knowledgeable financial professional can help formulate a debt payoff
strategy that takes the borrower’s overall goals into account.
Re-examine Asset Allocations
During an economic downturn, the stock market (and individual stocks) may see some
negative outcomes. Consumers with stock investments may panic and wonder if they
should sell before the stock price goes any lower. Investors with other holdings may
wonder if it’s time to make significant changes in their asset allocations.
Before making any drastic moves, Mark Hauser recommends that investors discuss any
portfolio adjustments with a knowledgeable financial advisor. Some online robo-advisor
businesses may offer this a la carte service. In the meantime, investors should continue
making their 401(k) and/or other regular plan contributions if possible.
Avoid These 6 Mistakes During a Downturn
In the midst of economic uncertainty, consumers could make emotion-based decisions
they might later regret. Before that happens, Mark Hauser recommends that individuals
first step back from each anxiety-producing situation. After analyzing its pros and cons,
they can make a more informed decision. If necessary, they should seek guidance from
a knowledgeable professional.
Increasing Debt Obligations
Interest rates may trend lower during an economic downturn. Even if that occurs, Mark
Hauser says consumers should avoid incurring additional debt. More financial

obligations decrease their budget flexibility and ability to respond to emergencies such
as medical bills or expensive vehicle repairs.
Incurring Additional Fixed Expenses
In an economic downturn, hiking expenses is not a smart strategy. Individuals should
avoid new fixed expenses such as a higher-priced apartment, new vehicle payment, or
upgraded mobile phone contract. Subscription-based expenses also fall into this
Cosigning Another Individual’s Loan
Cosigning on another person’s debt (even for a family member) is always a risky
proposition. If the primary borrower can’t (or won’t) complete a payment, the cosigner is
responsible for doing so. Again, individuals should avoid increasing their debt burden
during an economic downturn.
Assuming a Job is Safe and Secure
An economic downturn may (or may not) trigger layoffs at a specific company. With
that as a backdrop, employees should avoid becoming complacent at their current jobs.
Instead, they should take every opportunity to show how their skills benefit their
employer. If they are considering another job, they should avoid leaving their current
position until they have secured another opportunity.
Not Prioritizing an Emergency Fund
Individuals should not stop putting money into their emergency funds. Alternatively, they
should not delay starting a new one. Ideally, this emergency fund should be able to
handle three to six months of normal expenses (not luxury splurges). The fund should
also have a cushion for unexpected events such as essential home or vehicle repairs.
Not Re-evaluating a Changing Situation
The United States economy can experience fluctuations at any time. Likewise,
consumers’ personal financial situations can change with little warning. For these
reasons, private equity expert Mark Hauser recommends re-evaluating the household
budget on a monthly basis. Regularly reviewing asset allocations, and revising
strategies with professional assistance, can also set the stage for improved financial
Working with a Certified Financial Planner

To shape these wide-ranging goals into a cohesive strategy, consumers should consider
working with a Certified Financial Planner (or CFP). This financial services professional
has completed multiple targeted courses and exams to receive the CFP designation.
Equipped with this credential, the CFP is well positioned to help individuals and families
with money management and financial planning strategies. Consumers can learn more
about a CFP’s services, and how to select the right CFP for their needs, via the Certified
Financial Planner Board of Standards website.

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