There have been numerous reports about the sighting of a “Recession” lingering within the US economy. But does anyone really know for sure? Has it been caught on tape? Have there been group sightings or just isolated claims? If true, how long has it been here, should we shelter in place, and when is it planning to leave?
What is this “Recession” or as it’s called in the scientific circles— Economicus Deflatus? This beast can wreak havoc on the consumer and business community. It usually shows itself as two consecutive quarters of negative growth (GDP) in the economy. Most of the time it makes its presence felt well before one can confirm a sighting. But we have deniers. Yes, those who say it doesn’t exist.
We decided to take matters in our own hands and investigate this sighting. And what better place to start than with the US Government. The US Bureau of Labor Statistics reported that the last two quarters of Gross Domestic Product (GDP) came in at -1.9% and -0.9% respectively. Sounds like the textbook definition to us. But wait, could it have evolved over the years? Is there a new definition? Let’s see what the evidence tells us.
Consumers:
Spending is slowing as inflation hits 40-year highs.
Credit Card debt just hit an all-time high.
Mortgage rates have doubled over the last year.
Business:
Rising interest rates have caused an increase in expenses.
Lower sales have caused some companies to lay off employees, Apple has just done that due to lower-than-expected IPhone 14 sales.
Even the financial sector has joined in on the “recession band wagon”. Once favoring growth with easy money, banks have raised their credit standards. Fears of a Recession have also caused stock markets to fall in anticipation of its arrival. While these findings may be inconclusive, it certainly provides us with evidence that something is out there.
The one interesting indicator of its existence is the health of the job market. This has continued to stay strong. But as outlined above corporate America is starting to show signs of coming layoffs. Could be the wolf in sheep’s clothing – deceptive fella isn’t he.
So how compelling is the evidence? Given what we know so far, it’s probably a related species to the “Recession” that is in our midst. More commonly known as —-“Slow Down.” Its visits are normally shorter, and with a demeanor slightly more reserved. However, it can still inflect pain on the economy; however, it does not have the lasting “bite” of a recession. While neither of these beasts are welcomed, there are some things we must learn to live with. They tend to get rid of the excesses and bring things back into line.
The best way to protect yourself? Keep your financial house in order. A Recession can’t stand a clean and healthy balance sheet.