You may know the term “decision fatigue,” which encapsulates the difficulty that comes with choosing after you’ve already made so many decisions. But what about “recession fatigue,” a term that labels an increasing number of Americans, according to a recent report?
Here’s what experts say about recession fatigue, who it may be affecting, and why it’s such a problem as the U.S. economy gets rockier.
What is recession fatigue?
Bankrate published data in late September suggesting the prevalence of something called "recession fatigue."
Recession fatigue is exhaustion that occurs when you prepare for an economic downturn for an extended period of time, with ongoing uncertainty about what to expect.
Experts have been warning of a recession since the stock market began its bear run at the start of 2022. As we forge ahead in the fourth quarter of 2022, the outlook is even shakier, with some saying we've already reached the threshold. Heightened interest rates, lasting inflation, broadening layoffs, high gas prices (again), and more can make the average working American exhausted over time.
Nearly a third of Americans have recession fatigue, according to the report.
Bankrate says 31 percent of people surveyed aren’t taking adequate measures to protect themselves in the throes of a recession.
The report suggests that younger folks are at particular risk. Among younger folks, 40 percent of Gen Z folks ranging in age from 18–25 aren't prepared, compared to 31 percent of millennials ages 26–41.
Megan Gerhardt, professor of leadership and management at the Farmer School of Business at Miami University, told Bankrate, “From the Great Recession that may have caused financial stress for their parents to the chaos in health, safety, and stability that occurred with the pandemic, these formative events have fundamentally impacted the way Gen Z views the world.”
Recession fatigue is dangerous.
Recession fatigue can cause problems for Americans because it can prevent them from taking the right measures to protect themselves in a stronger downturn (think padding emergency funds, de-risking certain short-term investments, and minimizing debt).
It’s worth mentioning that individuals can only do so much in an uncertain economic environment. After all, the Federal Reserve is the one making decisions on monetary policy and Congress is deciding where federal dollars go. Because of this, it can feel like the workers get the short end of the stick, and that’s often true.
Retirees who tap out of their investments in a bear market risk losing years of capital gains. People working minimum wage jobs have labor limitations that prevent them from padding their pockets when higher costs eat into their paychecks. Students bombarded with global current events don’t trust that inflation-fighting investments will truly protect them.
At the end of the day, recession fatigue is a natural response to a period of economic uncertainty that never seems to end. Still, it can create gaps in Americans’ financial readiness — if they ever achieved readiness at all.
Jeffrey Galak, associate professor of marketing at Carnegie Mellon, told reporters, “People have spent [two-and-a-half] years managing a global pandemic, uncertain financial futures, political turmoil, and growing inflation.”
That, if anything, sounds exhausting.