So, a recession means, per the National Bureau of Economic Research's definition, that there is a "significant decline in economic activity spread across the economy, lasting more than a few months". Yet, when I venture out of my home, be it in Virginia, Kansas, Pennsylvania, or New Jersey, as I have recently; or as I drove across country from California to Virginia last November, restaurants are always packed to the gills with people, people are out buying things at stores, shopping malls are packed, and most everyone I know is gainfully employed. And as a business owner, its damn near impossible to hire people, people are demanding higher rates, and people are negotiating versus just clamoring for jobs. Furthermore, my company has more and more work coming our way than we can handle.
None of these observations are indicative of a "significant decline in economic activity spread across the economy, lasting more than a few months". And I don't live an isolated life. I venture out of the home and socialize with friends and family. I travel frequently for business so I get to see other parts of the country. I had the unique opportunity to take a long and leisurely drive across country from California to Virginia last year to see close up and personal how people were living. And I run a business that works with other businesses in a technology field, and thus I have a day-to-day up close and personal view of what the economy is doing at a micro-economic level for business. In other words, I'm not reading in a book or newspaper somewhere about what the economy is doing, I'm living in it.
Yet, I will occasionally hear that we're in a recession. Who's conveying this message? Most of where I hear this is coming from mainstream media. Is it true? An ivory white tower organization and bunch of pinheads can say we're in a "significant decline of economic activity spread across the economy, lasting more than a few months". But as I live and participate in this economy, it seems to me to be a bold faced lie. You can paint a picture however you want with facts and figures, but when it doesn't jive with reality of day to day life, you have to wonder about the source of this information.
I guess if stated enough times, people will start to believe it, and we'll start to behave as if we are in a recession. But then again, remember, it's an "election year". Come November, after the election, depending on the results, we'll magically have been transported into a new economy. And everyone will forget the dire straits we were in leading up to that day we all went into a building, pulled a few levers, and collectively erased from memory the fact that we were ever in a recession.
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2 comments:
Try selling a house right now and see how that compares to selling a house a couple years ago. I just did, and I consider myself one of the lucky ones to have been able to sell the place in ~120 days. My neighbor had his place on the market for a year, and finally ended up moving back in because it wouldn't sell for what he needed to get for it. My other neighbors did sell their house in 6 months, but after they came down 20% from their original asking. Other people I know still have homes on the market after more than a year.
My point is, sure a "recession" is an imprecise term, and sure, it's not so bad that people are all unemployed and starving. But there are very real facts - home foreclosures are the highest since the Depression, several banks have failed this year, and unemployment has actually ticked up, to 5.5%. Try visiting an IndyMac branch and see what happens if you think it's just ivory tower pinheads making this stuff up.
So I don't think you're letting yourself see the whole picture just by seeing people working and eating in restaurants. I have a good job, my company is doing well, and yeah, pretty much everyone I know has a good job, too, so I'm not going to be sounding some alarm. But I also acknowledge that not everything is coming up roses either.
While it's hard to sell a house right now, we know that 3-4 years ago, homes were selling at over-inflated prices. It's no surprise that people are now lowering prices, and that lending institutions are having trouble as a result. But, can we sit here and say that the fact that people can't sell their homes for what were previously over-inflated prices points to "a significant decline in economic activity spread across the economy, lasting more than a few months", when in fact "across the economy", people are obviously out spending discretionary income on over-priced meals, shopping and buying luxury items, and are gainfully employed? While you may not be alarmist, the media clearly is. And did I mention, its an "election year".
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