The recession is officially on

As you probably all know by now the U.S. “officially” entered a recession exactly one year ago in December 2007. The fun bunch of officials who have officially stated this are the National Bureau of Economic Research.

More specifically it was the organization’s super funky bunch, funily named the Business Cycle Dating Community. Another way of stating this is that the U.S. economy finished expanding one year ago and has been contracting ever since. According the the NBER we had 73 months of expansion, or 6 years and 1 month.

In making its determination the NBER examines many different sources of economic data. This is a good thing because it means that if they do make a statement then they see strong evidence of economic contraction permeating many statistical measures.

Buuuuut, I am certain that none of this comes as a surprise to any of you. Right? Well interestingly enough the “technical” definition of a recession has still not been met. Namely, two consecutive quarters of economic decline as measured by Gross Domestic Product (GDP).

So to the point of the post…

Recessions are personal and unique to individual households. You either feel them in your wallet or you do not. And you feel them well before an “official” statistical report. However, the danger of having an “official” measurement of recession and “official” talk of recession is that it tends to become a self-fulfilling prophecy.

You hear about recession being experienced elsewhere and so you cut back on spending. Less spending means economic contraction. Economic contraction leads to more talk of “recession.” Etc. Etc.

So are you personally experiencing recession or are you not? If you are not, then how are you responding to all of the news?

My advice is to ignore feelings of fear, but to pay attention to feelings of anger toward political, regulatory and business ineptitude.

I hope that each of you had a wonderful Thanksgiving!

Jason