The latest assessment of U.S. economic growth came up short of expectations on Thursday, fueling further predictions that a recession looms on the near-term horizon.

The Commerce Department’s Bureau of Economic Analysis found the country’s real gross domestic product output for the first quarter of 2023 grew at an annual rate of 1.1%, well short of the expected 2% and down from the 2.6% rate of 2022’s fourth quarter.

Robust consumer spending helped drive growth over the last three months but a suppressed housing market and decreases in business investments in inventory and production equipment — a metric that reflects diminished operator expectations — drove overall growth down from the previous quarter.

While the Federal Reserve’s nine-straight increases to its benchmark lending rate are showing some impacts as the cost of borrowing is well up over a year ago, and the recent tumult in the U.S. banking sector is expected to tighten the issuance of credit, the Commerce Department also found prices for goods and services are still rising at a brisk clip.

The report found personal consumption expenditures were up 3.7% in the first quarter of the year, the fastest pace since the second quarter of 2021. That spending rate is being fueled by healthy wage growth that moved up by almost $280 billion in the first three months of 2023, according to the report.

Overall annual U.S. inflation came in at 5% in March, according to the latest data from the Labor Department, down a full percentage point from February and the lowest year-over-year rate in almost two years.

But core inflation, a metric that strips out volatile food and energy costs and a data point closely watched by the Federal Reserve, saw a 0.4% increase from February and at 5.6% is now outstripping headline inflation for the first time since early 2021.

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An economic recession may be looming. Here’s how to get ready

So, what does it all mean?

The combination of inflation still running well north of the Fed’s target rate of 2%, combined with business slowdowns, is a bellwether for a looming recession, according to many economists.

“The economy had less forward momentum at the start of this year than previously thought,” Andrew Hunter of Capital Economics wrote in a research note, per The Associated Press. “We continue to expect the drag from higher interest rates and tightening credit conditions to push the economy into a mild recession soon.”

The Federal Reserve’s Open Markets Committee is set to meet next week and is widely expected to assess another .25% hike to its overnight lending rate, matching the last increase in March and a move that would mark the 10th straight increase for the monetary body.

Interest rate adjustments are the primary tool wielded by the Fed in chasing its dual mandate of maintaining maximum employment and price stability. But its series of rate hikes over the last year were one of the factors hurting Silicon Valley Bank, which last month became the second-biggest U.S. bank failure in history. Bonds owned by it and other banks have seen their prices fall as interest rates rose sharply.

Some general tips on preparing for a recession:

Most importantly, don’t panic. Yes, prices for basic necessities have skyrocketed and no one is predicting that will dissipate anytime soon. Yes, the Federal Reserve has raised benchmark interest rates and the cost of debt is on the rise. And, yes, opening recent 401(k) investment statements has likely been a gasp-inducing exercise.

But the expert advice is to keep cool and don’t be tempted to react by liquidating current investments as a tactic to avoid further losses. A recession could be in store, but they’re typically short-lived (the last one, amid the worst of the COVID-19 pandemic, only lasted three months). The same is true for bear markets. And the recoveries that come on the back end of inflationary/recessionary periods create the best opportunities, in terms of gains, for those who stay the course.

Address personal debt, especially the high-interest variety. The gist of the Fed’s interest rate hike strategy is to make credit and debt more expensive which, theoretically, discourages spending and slows down the economy. So, any outstanding debt you’re currently carrying that has a high fixed rate, or a floating rate that will track up with the Fed’s adjustments, needs priority attention. Credit cards are typically the worst in this category.

“Job number one for anyone with a credit card is to pay off their balances as soon as possible,” Matt Schulz, chief credit analyst at LendingTree, told The Washington Post. “When a recession may be on the way and interest rates are rising rapidly, it’s even more important.”

Stash that cash, but not under the bed. Financial advisers suggest we should all have savings in reserve that can cover three to six months of our living expenses. Easier said than done and particularly so for individuals and families that may already be scraping to keep up with big recent jumps in the cost of basic necessities.

The upside to recent increases in borrowing rates is upward movement (though not a lot) in saving vehicles like bonds or certificates of deposit, though savers should be thoughtful about how much cash to lock up in time-constrained accounts.

Make a plan, and do it now. Preparation for a harder slog is critical, but you should also be ready to navigate worst-case scenarios. What would be your first step after an unexpected job loss? Can you make budget adjustments now, ahead of any potential future economic deterioration, to be in a better position to weather the storm?

“I like to think of this weird, uncertain period as an opportunity to be proactive,” Farnoosh Torabi, an editor-at-large at CNET Money, told The Cut. “We can still make moves now without the real pressures that come with a recession like unemployment or a loss of income.”