Leading economist warns Americans to ‘hunker down’ and ‘save your pennies’ ahead of a possible recession – after it emerged households are spending $709 more a month than they were two years ago

Now is the time for Americans to “crouch” and “be careful” with their spending, a leading economist warned.

Nancy Lazar, chief economist at investment firm Piper Sandler, sharply warned Americans to control their spending after households were found to be spending $709 a month more than two years ago.

“Save your pennies, because unfortunately the economic outlook will get worse before it gets better,” Lazar said Fox News digital.

“Be conservative, be careful with your credit cards. It’s a time to lay down and try to maintain your savings instead of going further into debt.”

It comes as America’s credit card debt has broken the $1 trillion mark for the first time in history, according to Federal Reserve data.

Credit card balances rose $45 billion in the second quarter of the year as interest rates – which recently hit their highest since 2001 – and rampant inflation continue to weigh on households.

Lazar described the economy as “overheating” and said price levels remain “abnormally high.”

The annual inflation rate rose slightly to 3.2 percent last month, a slight increase in July from June’s annual increase of 3 percent.

“It’s not just restaurants that have raised prices significantly — it’s also in the supermarket, which is causing a cost-of-living crisis for many people in the country today,” she said.

Moody’s Analytics analysis found that inflation is forcing Americans to spend $709 more per month on everyday goods and services compared to two years ago.

To bring prices down, she adds, “unfortunately, classically, it takes an outright downturn in economic activity or a recession.

Consumers have every right to protest against these higher prices. As a result, you increasingly see that consumers haggle and buy less in supermarkets.’

According to Lazar, a looming recession will put pressure on all wealth groups in the US.

It’s not just low-income workers who will be laid off. It will be across the board,” she said. “But we’d better take that short-term hit to get these price levels back to normal.”

In addition to inflationary pressures, Lazar said economic recovery would depend on addressing the budget deficit.

“We need to limit government spending and we need to reform entitlements, including social security reform,” she added.

The US debt has surpassed $31 trillion — with the House of Representatives and Senate passing legislation in June to prevent a catastrophic government default by days.

Added pressure on household budgets has increasingly forced Americans to take extreme measures to cover their expenses.

A report from Bank of America earlier this month found that the number of employees taking “hardships” from their 401(K)s was up 36 percent.

And according to the latest data from the Fed, there are 578.35 million credit card accounts in the US. It represented an increase of 5.48 million compared to the end of last year.

The average interest rate on credit card balances is also at a near all-time high of 20.53 percent, according to Bank rate.