Is This A Recession?

I haven't seen anyone lose their jobs yet, but I have seen people start tightening their budgets. If people don't start spending again, you'll see jobs in the service sector go first as people start cutting out luxuries like movies and restaurant visits. Once that starts, then recession will be inevitable because once those is the service sector lose their jobs, the economy will really tank. I'm not sure we are in a full-blown recession right now, though.

Well actually On P, the word recession can be defined in a few ways. The way the Government wants to define it and another way that uses the total inflation as a basis in the equation.

By using the total inflation, which counts the cost of food, commodities as well as fuel, has been around 8 to 10 percent and the growth of the economy has been somewhere between 2 to 4 percent since May 2007, the US has been in a recession since May 2007.

However, the Bush administration doesn't see it that way, even tho others do.

The Bush Administration would not admit we were in a recession if we had bankers taking headers off of their office buildings and former stockbrokers selling apples on street corners. We could have unemployment at 10% and all of that and they would still find a way to blow sunshine.

"blow sunshine"- you coined a colorful phrase, Carolyn!

If it looks like a duck, it waddles and quacks and it has feathers, it's probably a duck.

Yup, it's recession all right. And sinking, sinking, sinking fast.

All I know is I got a vacant house that belongs to my mother in law and I have about as much chance of selling that sucker for her as George W. Bush has of inking a treaty between the Israelis and the Palestinians.

Well Chris, at least I didn't include the last part of the phrase. I consider it rather insulting the way the administration talks down to us and tries so hard to tell us a duck is a mountain lion. They don't have to say the economy is in a recession. Maybe that's bad politics. And I understand that. However, what I so object to is best described by "blowing sunshine" --trying to put a sunny spin on everything no matter how bad it gets.

It reminds me of that old saying that it is better to remain silent and be thought a fool than to speak out and remove all doubt. When the President says he "sees a little cloud on the horizon" when a hurricane has a 60% chance of taking out your home, then he's not being honest.

The economy seems pretty bad from where I'm sitting. I'm paying a lot more for groceries and fuel and our income had not kept up so we're spending less on everything that isn't a necessity.

I personally know two families that have become homeless in the last few months. I know even more people that struggle to keep the heat on or put food on the table.

Why are we worried about a recession? It seems we have had them before and we have come out of them.

sure Duane. Some of us have come out the other side still in a house. Some of us however end up on the street on the other end.

it could be said that Recessions are educational. Some of of us have been pretending over the past few years that we have seen our last one. That was silly, and the subprime mess is partly an outgrowth of that unrealistic psychology.

I think we are going into a recession....but if we are budget savvy we can come out well!

I live in Michigan and it has seemed like a recession here since 2001. The phrase "Michigration" has even been coined to describe the large numbers of people exiting the state.

Hillari M. makes a good point.

When you ask if "we" are in a recession, you have to define who the "we" is in the question. Economics, like Real Estate, is a very local, dynamic concept. The problem many people get into is when they look at statistical averages over too broad a market. Now, I know that we are all interconnected in this global economy, and all that, but in a very real sense, it is the local economy, not the national economy that makes the biggest impact on most people. In some areas, "recession" is a way of life. In other areas, the quality of life, and people's economic outlook hasn't ever looked better.

Whenever I hear a national weaatherman talking about averages, trends or forecasts, I simply look out my window, and get a much better idea of my local weather. The same is true of economists. Unless they are talking specifically about your neighborhood, chances are, their analysis misses the mark when it comes to how the economy affects you directly.

If you were to evaluate the globe, and use global statistics to arrive at a conclusion about things in your own back yard, here is what you might expect to find:

The average person living today has brown skin, speaks Chinese, is Muslim, and makes less than $10 per week, has more dead siblings than living ones, and has a hard time finding safe drinking water. Statistics and averages are relatively meaningless when it comes to evaluating your own place in the scheme of things. The odd thing is, though, that the media, and to some extent the political powers keep feeding us statistics and averages. As long as people keep buying what they are spouting, things won't change either.

In politics, if one makes over $250,000 a year their ok. But if not then their excusable. But if one makes less that 80,000 their on the poor side, but not told or treated as so.

The sad part is that the perpetrators of the recession will not suffer.

Having gone through the last major recession, I smell recession in the air. However, we have an election coming up and that could change things so it is hard to say. There are some ominous signs but I'm no economics expert. Still, the housing situation isn't good, real estate taxes in some areas are just frightening and I do think the housing crisis will affect the entire economy. We've also had a number of record-breaking weather situations, from floods to hurricanes. All have an effect.

What concerns me more than anything? People don't save enough, recession or not. They'll be hard-pressed to fall back on savings if they lose their job, their home and hard times come home to roost. Maybe it'll encourage them to save when times are better.

I don't buy the argument that many people CAN'T save. I know people who make minimum wage and manage to save and I know others who raise a family of five on money that some would find low for a family of two - and the family of five saves while the family of two does not.

Somehow a lot of luxuries seem to be "necessities".

Duane, prior recessions were what economists refer to as "corporate recessions" These were more like speed bumps to the consumer.and affected more of the upper class. An example of this was the dot com bubble burst. This recession will be a "consumer recession" and, make no mistake, this will be a very heavy burden to the consumer as inflation and lack of credit will curb his ability to buy what he needs to survive.

Want a good stock tip? Invest in companies that provide security services -- the higher unemployment gets, and the less money people have, the more likely it is that some of them are going to turn to armed robbery, rioting, looting, and such.

This comment is to let you know that this content has reached ten comments, and as such has been removed from Comment Speedway! Congratulations!

Jobs are laying off in our community. It sadens me to see all this happen but I think we are already in a recession.

Jane,

I will date myself, I have been part of recessions that were felt by consumers/workers when those corporate recessoins happned. I ascribe to the adage: when your neighbor losses his job it's a recession and when you loss your job it's a depresson.

Right now there are all the wring of hands about morgage ARMs, house prices, inflation, etc. To keep this in prespective, "staglation" [some reports have mentioned] was coined in '79-'80 when inflation was double digit, the only way to get a morgage was to pay an annual ARM at 13%, and evryone [even the economists] felt was full employment which noone felt would ever be achieved. The consumer/worker were feeling that recesssion. Even the corporations felt that recession.

There was a benefit to that recession, we changed, productivity became a real focus, efficeincy in energy/all raw meterials became a real focus, the knowldege and skills became truly important, whole industries were force to change. Those that chnaged then, consumers and companies, were the ones that have been least effected by succeeding recessions (including the one the economist are predicting now).

The vast majority that will suffer now are those that have postponed changing to prepare for recessions. The peolpe that have extended themsleves financially for without any consideration for an economic speedbump personally or nationally or globally are the most suseptable. Whether it be those that bought or leased up to their pay, such as the interest only no money down morgages, or the auto companies that kept doing business (payroll, benefits, staffing, etc.) as usual. Are the ones suffering most.

To my way of thinking it is better to suffer the small bumps (more frequeunct recesssions) and clean out the excess in small bite, rahter than putting off to long so we suffer a big pot hole and the suffering draws in those that were trying to be ready for the bumps. This slowdown will help us wring out excess and for the smart ones they will make more changes.

In many areas of NYC (I live and work in upper - northern - Manhattan), there are blocks of stores out of business - in a two block radius at least five stores are shuttered.
That signals a negative economy to me.
And check out the lines at the dollar stores... hmmmm.

I live in Washington state, which has one of the highest (if not the highest) minimum wages. In the same week, my local newspaper printed an article that examined how that fact affects those who live on the border of Idaho (minimum wage $5.85), and one which reported that the number of Washington families living below the poverty line has risen.

My state pays a minimum wage over 2 dollars above the Federal minimum, but our families are increasingly living in poverty. I don't think you're stupid, I just think that fact is worth repeating. The top 1% gets richer, while the rest of us are forced to make do with an ever-decreasing piece of the economic pie.

My theory (based on empirical evidence) is that the economic cycle resembles the evaporation/condensation/precipitation cycle of water. There have been recent times (like the S and L scandal and its aftermath) when the natural economic cycle has been tampered with in order to stave off the "precipitation" part of the cycle. We're going to experience a "perfect storm" economically if something isn't done! I think it's too late to avoid it entirely, so batten down the hatches.

Jeannie,
I repeatedly hear that the top 1% keep is getting richer as if that is wrong or some how evil. What is so bad about them getting richer.

When you talk of economic cycle, yuo suggest that this has occurred in the past and will occur in the future. Should we be trying to stop the economic cycle or should we accept it and plan to survive it?

What is very different about this downturn - which was somewhat predictable two years ago when the Fed inverted the yield curve - is that it is not following a period of strong economic growth with above-average rates of inflation and the usual accompanying higher interest rates.

For some reason, Greenspan, who was the chairman two years ago, decided to attack the forces of inflation before they arose. He may have been influenced by the rising debt and the already falling dollar. Anyway, we've not gone into a recession since WW II that was not preceded by an overheated economy - until possibly now.

The irony of the situation is that we may get both a recession and inflation for a period of time. If so, equities may not be a great investment. In the seventies, the stagflation that occurred helped limit the Dow Industrials to a growth of less than 1% during the decade.

Another unusual aspect is that this administration may be remembered as the only one that allowed a recession to occur in an election year. It's been a given for decades that this just doesn't happen and the Fed has been a willing handmaiden to the political process in managing the economy so that it doesn't happen. The whole scenario here suggests to me that things have gotten a little out of control.

The fact that the Fed has pumped at least $200 billion into the banking system in the last five months, in addition to providing tens of billions to the central banks of certain other countries, is not a good sign for the economic outlook.

We can only wonder how much they pumped into the B of A to induce it to buy Countrywide, if indeed it does.

One of the risks here has to do with the liquidity crisis that exists in the financial community and that therefore affects many businesses, except for the industries that have flourished under the policies of the Bush administration. Those companies are flush with cash. Exxon has $62 billion in cash and current receivables and Pfizer between $30 and $40 billion, for example. With any significant drop in equity prices, most companies in the defense, pharmaceutical and oil industries will be in the catbird seat with all the cash they've been hoarding in unprecedented amounts.

But for the rest of the nation, the liquidity crisis could add woes to any recession we might have this year, and my guess is that the Fed may say in two or three months that a downturn started this month or last month.

A major paycheck company went into chapter 7 last week and the reverberations were felt in several cities including London. The company blamed it on the liquidity crisis. A Texas company had $500,000 on deposit with them which is now at risk. The many employees of the paycheck company in LA, New York, London, Toronto and Vancouver were simply told to go home and not come back - no severence or golden parachutes for them. Those living from paycheck to paycheck have problems, and there could be more situations of a similar nature with other companies as the year goes on.

I didn't mean to be so wordy but this is a subject I've been closely involved in for 50 years and the situation that exists today is almost like - and I apologize for using such an overused term - a perfect storm. I have never seen so many dangerous trends ready to come together.

For example, past recessions have produced lower interest rates which in turn have fueled the real estate market which has historically helped revive the economy. That may not happen now, if a recession develops. Our current real estate problems will likely only pull the economy down further.

The good news is that nothing is certain but death and taxes...

David,
You maybe too young to remember Greenspan's action or lack of action in81's that help Clinton coin the prhase "its the economy stupid".

How do you define a resession? If we're not in it by your definition then how long shold wait for your results to happen, before you would agree that there wasn't one?

I like the economists' critieria of two succeeding quarters of negative GDP growth for an official recession, since that is te way all precious ones have been defined.

I still believe in the personal definitoin I mentioned earlier, but that can happen when the economy is going great.

Hey, Duane.....I think you meant '91, and the recession of 1990 was actually foredoomed when Greenspan created a tight money situation that caused the yield curve to be inverted in February of 1988 (as he again did two years ago)....

As far as a definition goes, I'm afraid this one coming up, or that we're already in, will qualify by any definition. Generally, the Fed "discovers" that a recession has already started two or three months after the fact.

In 1990, for example, the Fed was still denying there would be a recession after the date they later said it actually began (and the truth is that, like most recessions including our current possibility, they not only know darn well there is one or that there is going to be one but also they intentionally caused it. The Fed does this because of its long term obsessive fear of inflation.

A good axiom is: don't ever believe anything the Fed says unless it's talking about proven history.

I like your personal definition too, by the way....

I did want to add that if we live with certain financial guidelines all the time then we may not avoid a recession or even a depression (and I'd SURE like to know if there is a difference between a "deep recession" and a "Depression") but we can ease the consequences.

Example: Those entering a recession with lots of debt, a home they can't sell, no savings and a job that is suddenly "eliminated" is going to have a tougher time, arguably, than the person who has savings, no mortgage, a solid or necessary job (brain surgeon, heart specialist, flood specialist) and no debt.

A depression actually is deflation, a period of falling prices.....Because of the world scarcity of certain commodities such as copper, oil, platinum and wheat, we are likely to see prices continue to rise in the early phases of a recession at this point. If, however, it develops into a worldwide slowdown, prices could fall.

Deflation is the nastiest of economic scenarios. Falling prices cause companies to trim their inventories to the bone and also cause consumers to postpone purchases because items are getting cheaper. The result is a vicious cycle of layoffs, falling demand and more layoffs. It would be very difficult for the Fed or the government to break the cycle. Normally, the government would increase its expenditures but with the debt level we now have there's not a lot of room for that.

The negative effects of the Great Depression were still ongoing when World War II started more than 10 years later.

I know some don't like to look at statistics and some don't believe them, but the information we have, for what its worth, shows that America as a whole would be going into this recession, if there is one, loaded with debt, mortgage debt, credit card debt, personal loans and revolving charge accounts.

Given the aggressive way that lenders have been foisting credit on the public over the past few years, I am inclined to believe that the data is correct...

David,

Thanks for the correction on 1991 for the recession th FED wouldn't try to mitigate.

The reason I ask for your decription of a recession, is that for myself, when I have a critiera for an event or condition so I can determine if my thought process and knowledge is correct or if it needs to be modified.
You are expecting a recession based on your knowledge and experieince. How would you know if a recession occurs, and whether you need to modify and what to modify, if you didn't have some criteria for a recession?

The definition I've heard the most, Duane is two quarters of negative growth, but once the definition is satisfied the official start of the recession backs up to the point the growth started to decline

And, by the way thanks for speculating that I'm "too young to remember." I appreciate that...

Tomorrow Citibank will layoff 24,000 people and slash it's dividend in half.

It would appear that there will be less business to do and less money to be made in the near future.

I still see people out and about shopping etc. I know the prices are high, but it seems people are still paying them. When we go out to dinner. The lines are long and wait is long.We went shopping at the West Farms mall which has a lot of high end stores and it was crowded. Everywhere I go there are long lines. There are not a lot of jobs out there for the typical person. There are a lot of high quality jobs which require degrees in specific fields. There are not a lot of options job wise.

Is this a recession? Not sure!

I would say that we are in the beginning stages of recession. There has definitely been a "slowdown" as the president likes to call it. I'm hoping that this recession will be short lived.

Bush was a good President.

The answer is YES! This is already an economic recession. The symptoms of recession are all over and new symptoms seem to be appearing daily on the news: layoffs, declining markets, plant shutdowns, small businesses going under, and drastic corporate budget cut-backs. And now, everyone of us is experiencing recession blues. Recession blues are pretty common – the economy is depressed, so everyone else is too. For those that come into a difficult situation, help is available. If you don't want to deal with late fees or bank fees, you can get payday loans. It's a small loan that you pay back after a couple of weeks, usually your next payday. It won't cure the recession blues, but it can help you to repair credit or relieve debt.

When interest rates are low, the recession is short lived. Also when interest rates are low, the property markets rise in value, so do the house building sectors and service industries that go along with it. Towards the end of this summer I think that those sectors such as car making and car dealers will profit eventually. The debt scenario is part of this credit crunch though nothing has changed other than homeowners are going to benefit.

On Point Webmaster, you ask: "Does it look like a recession to you?"

Why did George HW Bush lose his reelection?
An economic recession, and doubts of whether Bush ended the Gulf War properly, reduced his popularity.

Sound familiar ?