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With debt ceiling deadline fast approaching, local financial advisor says prepare for a recession

"Now is also a good time for retirees to consider part-time work or consulting," certified financial planner Shandre Harasty said.

SUFFOLK, Va. — The June 1 deadline to raise the debt ceiling is inching closer and talks hit a standstill on Friday, just days before Congress gets back to work on Monday, May 22.

Meantime, the Federal Reserve is split on what to do next with interest rates to fight inflation. So, what does this mean for your finances and your future?

13News Now spoke to a local financial planner for some answers.

Shandre Harasty is Certified Financial Planner for Edward Jones in Suffolk. She explained, "In June of last year, inflation was at 9.1%. Inflation is down now to 4.9%, but food inflation is still higher at 7.1%."

Even with inflation down a bit, Harasty said we need to get ready for a recession.

"Because banks are tightening their lending and when banks are less willing to lend, this slows down economic activity and when economic activity slows down, company earnings drop which will lead us into a recession," Harasty warned.

The Fed has raised its key rate by 5 percentage points in the past 14 months, leading mortgage rates to more than double while also raising the costs of car loans, credit card borrowing, and business loans.

"The slowing of inflation reinforces our expectations that the feds will pause interest rate hikes, but that doesn't really mean interest rate cuts because inflation is still way above the target rate," Harasty explained.

Harasty also said it's important now to evaluate your spending and your savings, so you're able to meet your long-term financial goals.

"You have to be able to protect against the rising cost of living over your lifetime," Harasty said. "Now is also a good time for retirees to consider part-time work or consulting. This will help you delay dipping into your retirement saving and also social security."

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