The economy is getting worse. Now what?

The past two weeks of our economy, in brief:

• Inflation jumped to 3.7%. Gas drove more than half of it, up 34% from a year ago (this affects everything from your tank to airfare. Prices are still rising, and essentials aren’t getting any cheaper.
• The economy added a grand total of 29,000 jobs in September. Companies aren’t necessarily firing everyone, but they’re barely hiring, either.
• Mortgage rates hit 7.4%, the highest since 2023. On a $600,000 loan, that’s roughly $440 a month more than this time last year.
• Next Wednesday, the Fed might raise rates again (though currently less likely). Credit card and HELOC rates would go up, savings rates would rise, and the job market could cool further.
• And yet, we’re probably not in a recession. GDP is still growing, unemployment is lower than a year ago, and the S&P is up about 14% this year. Most forecasters think a recession this year is unlikely.

All of this is happening on the eve of the midterms, where affordability is front and center.

The national mood is, understandably, pretty terrible. My social feeds have become a nonstop parade of recession predictions and people debating whether they’re better off stuffing cash under their mattresses.

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I get lots of emails and text asking for financial advice (which I love!) and they generally go something like … is there any point in saving? Should I save more? Should I stop investing? Should I quit my job? Should I not quit my job? Should I just give up?

All fair questions! (Except for the last one).

I spend an absurd amount of time reading, thinking, and writing about the economy. And yet very little of what happens on any given day actually changes how I manage my own money.

We’re very good at listing everything that could go wrong, and very bad at figuring out which of those things should change our decisions.

So today, let’s talk about when I’d actually change a financial plan, what I’d leave alone, and three rules for knowing the difference.

Coming up:

• Why I moved some of my own money out of stocks this year (it wasn’t a market call)
• The one question that tells you how big your emergency fund actually needs to be
• The “pencil vs. tattoo” test for decisions in a scary economy
• Three questions a headline has to pass before you do something about it.