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It may depend somewhat on where you live, but it DEFINITELY depends on what you're doing right now.

2 minute read

College and NFL football seasons are well underway, and several notable upsets have already happened. What defines an “upset”? A game who’s score was markedly different than the experts predicted.

Much the same happens with recessions.

I’m not cavalierly comparing economic downturns to gridiron sports. I am saying experts can line up all their stats and facts and still miscalculate — hence the expression, “That’s why they play the game.” If the experts were always correct, the teams wouldn’t need to.

Predicting recessions

I’ve been wondering aloud about another recession since July 2016. I’ve mused on the topic several times since then. At first, most other financial experts were skeptical. Now, one small business publication is so sure about a looming recession, it has compiled data on which states are the best for riding one out…

U.S, map showing the 10 best states for weathering the next recession

Fit Small Business says it compiled “publicly available data from heavyweight sources such as the Bureau of Labor Statistics, Bureau of Economic Analysis, and the Federal Deposit Insurance Corporation and analyzed it.”

The results were 10 states that touch neither coast and have some of the smallest populations…

  1. North Dakota
  2. Nebraska
  3. South Dakota
  4. Arkansas
  5. Oklahoma
  6. Kansas
  7. Iowa
  8. West Virginia
  9. Wyoming
  10. Indiana

Whatever you think about Fit Small Business’s methodology, it’s difficult to argue this: The editors wouldn’t have spent the time if they didn’t think it was a possibility.

More unexpected results

You should consult experts but not blindly follow them. In fact, the best experts will admit their limitations, which is why I’ve expressed some percentage of doubt in my own calculations. Like I said earlier, that’s why you play the game.

If you want proof that experts can easily be wrong, check out this disturbing headline in Business Insider from back in June: Americans are suddenly defaulting on their credit cards.

This is worrisome, of course, but note the language in the article:

  • It’s “curious that Americans have suddenly stopped paying off their credit-card bills at a rapid rate.”
  • “The sharp increase, the largest since 2009, is especially unusual.”
  • “Things could get messy in a hurry if the economy takes a turn for the worse.”

The italics are mine, but the conclusion is clear. Experts seldom say, “Wow, I didn’t see that coming.” They couch their incorrect predictions in “That’s curious and unusual.”

What you should do

To keep the NFL metaphor going, if you bet on football, it’s good to hedge your bets. You don’t place all your money on just one team. You bet on several teams, so if one game goes against the expert predictions, you might win another and still make out OK.

Likewise in your own game of life, the worst thing you can do is bet on one specific outcome. I’ve seen too many otherwise intelligent Americans invest in the stock market at its height, or try flipping homes right before the housing bubble burst.

Often, the sanest course of action is the most boring: Control your spending, pay down debt, beef up your emergency fund. If you want the full story, check out How to Recession-proof your Finances. Do that, and you can become your own expert.

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The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.

About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC