3 Things That Will Cost You More If a Recession Hits — and How To Prepare Now
While it seems that the threat of a recession has been in the headlines, the U.S. hasn’t actually seen a recession since a brief period in February 2020, according to the National Bureau of Economic Research (NBER)’s Business Cycle Dating Committee that determines the dates of a recession.
Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University and executive editor at Econofact, explained a recession as occurring when “a set of economic indicators, such as GDP growth and unemployment, indicate a downturn in the economy.”
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One surprising thing that Klein noted is that recessions are not typically associated with rising costs, unless the recession is brought on by something like a spike in oil prices, as happened in the 1970s. "The threat of recession now comes from spiking oil prices, other shortages due to the blockage of the Strait of Hormuz and uncertainty that stalls business spending and spending by consumers,” he added.
It is these factors that lead to higher oil and fertilizer prices that in turn raise the price of gasoline, many foods and home heating and electricity. If a recession were to hit, it’s important to know what will cost you more and how to prepare now.
Gas
We’ve already seen gas prices rise since the start of the Iran War. NBC News reported that gas prices have gone up by more than 30% since the war was initiated earlier this year.
On that day, the daily price for gas was $2.98. The daily price hit a high of $4.56 in May and has since come down to $4.09 as of Aug. 19. Even if a recession hits, gas prices may remain high, continuing to stress consumer wallets.
Groceries
Much of farming requires fuel for growing and transportation and even fertilizer production and refrigeration, according to CNBC Make It. According to Consumer Price Index (CPI) data, groceries are already going up as a result of inflation, with food-at-home prices increasing 2.7% from June 2025 to June 2026 and food-away-from-home prices rising 3.4% during the same timeframe.
If oil and gas prices continue to rise, groceries may also continue to see rising prices even during a recession.
Utilities
Not all utility costs go up with oil prices, but Realtor.com reported that the 4.79 million households that use heating oil could see a higher heating bill than usual. Recession or not, utility costs continue to rise, with 68% of respondents in a PowerLines poll saying that their electric or gas bill increased since last year.
Electric rates have increased by 40% since 2021, according to the report, leading to a strain on the nearly 80 million Americans who are struggling to pay their utility bills. A recession in which people lose their jobs paired with higher utility costs, could have an even more negative impact on U.S. households.
How To Prepare for a Recession
Because prices actually tend to go down during a recession, the real threat to consumers from a recession, Klein said, is that they may lose income if they lose their job or if their hours are cut back.
As a result, preparing for a recession now can help lessen the effects of a layoff or reduced hours later. “The prudent thing,” Klein said, “is to have enough savings to see you through difficult times — although this may be hard for people whose incomes just cover their expenses.”
When possible, tuck some money aside from each paycheck to build a cushion to be used for emergencies or unexpected expenses. You can also work to cut back expenses, making decisions between wants and needs and focusing on the latter.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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