There's been a lot of uncertainty recently about whether or not the United States will soon enter a recession. But some indicators suggest that's the direction we're headed, according to Colorado financial adviser Bruce Allen.
Allen said there are four reasons economists think a recession could be coming: consumer confidence is declining, stocks are falling, markets are becoming more volatile and short-term interest rates are higher than long-term interest rates.
Allen said, that last one has come before every recession since 1960.
"It doesn't assure that we're going to have a recession," Allen explained. "But it has indicated a red light in terms of the economy moving forward."
Allen said the three-month treasury bond is now paying an interest rate of 4.29% compared to a 10-year treasury bond paying 4.25%.
"That's unusual," Allen said. "That doesn't guarantee a recession, but it makes it much more possible."
Allen describes the current economic situation like a traffic light.
"We've gone from a green light to a yellow light. If some people were at a yellow light, we've gone to a red light," Allen explained.
But looking ahead, Allen said the warning signs have "gone from a yellow light to a red light."
Each person's financial situation is different, but in any case, Allen suggests talking to a financial adviser or 401K adviser to make sure you're prepared.
Some financial institutions, like Equifax, have some steps you can take now to prepare for a potential recession.
Denver7 also has a guideon how you can set up a budget.
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