Economists warn that a major recession is coming to the U.S. How can ordinary people protect their wallets?

A recent CNBC survey showed that 81% of Americans believe the United States will experience a recession this year. Larry Harris, former chief economist of the U.S. Securities and Exchange Commission (SEC), also warned: "It will be difficult to prevent inflation without experiencing a recession."

By almost every measure, the U.S. economy has staged a stunning recovery after the coronavirus pandemic led to massive shutdowns and layoffs across the country. The labor market has added millions of jobs and wages have risen sharply, even in low-paying positions.

But soaring inflation and rapidly rising interest rates have most Americans worried that the good times will be short-lived.

“Are we going to go into a recession? It’s very possible,” Larry Harris, who also holds the Fred V. Keenan Chair of Finance at the USC Marshall School of Business, told CNBC.

BitPush previously reported that in order to curb soaring inflation, the Federal Reserve hinted that it would continue to raise interest rates. At the May interest rate meeting, the Federal Reserve announced that it would raise interest rates by 0.5 percentage points, the largest single rate hike by the US central bank since 2000, and announced plans to reduce its $9 trillion balance sheet.

When interest rates are higher, consumers earn higher returns on the money they keep in their bank accounts but have to spend more to get loans, which may prompt them to borrow less, which in turn means less money flowing into the economy and ultimately slower growth.

Harris explained: " Raising interest rates is a way of discouraging spending by increasing financing costs. There will always be a big recession, the question is how soon."

Concerns that the Federal Reserve’s aggressive moves could tip the economy into recession have sent financial markets sliding for weeks. Harris said higher fuel prices, labor shortages and a new wave of coronavirus infections due to the war in Ukraine are posing additional challenges.

The last U.S. recession occurred in 2020, which was also the first recession experienced by some young millennials and Generation Z.

But in fact, recessions are quite common. Before Covid 19, the United States had experienced 13 recessions since the Great Depression, according to the National Bureau of Economic Research, each of which was marked by a significant decline in economic activity that lasted for several months.

Harris said people should prepare for "belt tightening." For the average consumer, that means "eating out less, switching things up less often, traveling less, and buying burgers instead of steaks."

While the effects of the recession will be felt broadly, each household will feel it differently, depending on their income, savings and financial situation.

Harris offers a few tips for the average consumer:

1. Cut spending. “If they anticipate they’re going to be forced to cut spending, the sooner they do that, the better off they’re going to be,” Harris says. That might mean cutting back on just some non-essential expenses now, like a subscription service you signed up for during the pandemic. If you’re not using it, cancel it.

2. Avoid variable rates. Most credit cards have variable APRs, which means they are directly tied to the Federal Reserve's benchmark, so anyone carrying a balance will see their interest charges rise with every move the Fed makes. Homeowners with adjustable-rate mortgages/home equity lines of credit that are tied to the prime rate will also be affected.

“This is a particularly good time to identify any outstanding loans you have and see if refinancing makes sense, and if there is an opportunity to refinance to a fixed rate, do it now before rates rise further,” Harris said.

3. Store extra cash in Series I Savings Bonds. Series I Savings Bonds are bonds issued by the US Treasury. These inflation-protected assets backed by the federal government carry little risk and have an annualized interest rate of 9.62% as of October, a record high.

While there are purchase limits and you can't access the money for at least a year, you'll get a better return than a savings account or a one-year certificate of deposit, which pays less than 1.5% annually.