A customer shops in a Kroger grocery store on July 15, 2022 in Houston.Brandon Bell | Getty ImagesAs experts debate whether the U.S. is on the brink of an economic downturn, many Americans are already bracing themselves for a recession.To that point, 66% of Americans worry that a major recession is right around the corner, up from 48% who said the same a year ago, according to a survey by Allianz Life Insurance Company of North America.One big reason is that people fear high inflation, which has pushed prices higher for goods and services.The survey found 82% worry inflation will have a negative impact on their purchasing power in the next six months. Moreover, the same share of respondents said they expect inflation to get worse over the next 12 months.More from Personal Finance:What a recession could mean for youBest money moves after the Fed's interest rate hikesNearly half of all Americans are falling deeper in debtMeanwhile, 71% said their wages are not keeping pace with rising expenses.(Allianz Life conducted the online survey in June and polled just over 1000 individuals.)Data released last week by the U.S. Department of Commerce only further stoked fears of a downturn, with gross domestic product declining for a second straight quarter, a traditional signal of a recession.However, the White House was quick to reject speculation that a recession is already here, with President Joe Biden citing record low unemployment, among other factors.Consumer spending increased 1.1% in June due to rising inflation, according to government data released last week.Yet as recession fears rise, that may already be prompting Americans to change the way they handle their money.Why a recession could be consumer-ledEven with the latest data, consumer spending has been pretty flat for the past seven months, according to Jonathan Pingle, chief U.S. economist at UBS.At the start of the year, households were in good shape with excess savings and solid labor market gains. But then high gas prices and rising interest rates were piled on."Altogether, it's just proven to be a much weaker trajectory for consumer spending than I think most people expected," Pingle said. "Where we sit now is kind of in a tenuous spot for the economy."The big question experts are debating now is whether or not the country is already in a recession.UBS' probability model currently has a 40% odds of a recession in the next 12 months. The first quarter slowdown in GDP had some "really noisy" components, which were payback from a strong fourth quarter in 2021, said Pingle, making the reason for quarter-to-quarter declines still inconclusive.A consumer-led recession is one way in which a U.S. downturn could play out, according to a recent UBS research report. Another scenario may be caused by the Federal Reserve overtightening.If consumer spending pulls back, that could be a confidence shock, Pingle said. That could be prompted by households increasing precautionary savings as they worry about the future and postpone purchases.To be sure, ramping up savings and paring down spending are the tips generally given to individuals who want to limit the impact of an economic downturn on their finances."Pay down your debt, boost your savings and keep making those retirement savings contributions throughout the ups and downs," said Greg McBride, senior vice president and chief financial analyst at Bankrate.com."Long-term, when you look back you'll be really glad you invested in 2022," he said.How recession worries vary by generationYet Allianz Life's recent survey found 65% of investors say they are keeping more money than they should out of the market now due to fears of losses.For baby boomers, the No. 1 concern, cited by 73%, is that they will not be able to afford the lifestyle they want in retirement due to rising costs. That was up from 66% who cited that worry in the first quarter."Having this kind of a downturn coupled with this type of inflation for somebody who is newly retired can really drain your assets significantly faster than you had ever expected," said Kelly LaVigne, vice president of consumer insights at Allianz Life.For Gen X, the biggest worry is that their income is not keeping pace with rising costs, cited by 75% of respondents, up from 68% in the first quarter.Having this kind of a downturn coupled with this type of inflation for somebody who is newly retired can really drain your assets significantly faster than you had ever expected.Kelly LaVignevice president of consumer insights at Allianz LifeMeanwhile, fewer millennials have a financial plan in place to handle rising inflation. The survey found 56% currently have such a plan, down from 61% in the first quarter.For all individuals, coming up with a financial plan can help limit the effect of economic uncertainties, LaVigne said."Regardless of whether you think you have enough money or not, there's a right financial advisor out there for you," LaVigne said. "And it's never too early and it's certainly never too late."Not having a plan is the worst thing you can do," he added.
Americans are anxious about a recession as inflation cuts into their spending power.