Thursday, November 13, 2008

Recession, what recession?

Most all of the financial news sites and media outlets have been reporting for months that the US economy is in a recession. Now it's being reported that we are in the midst of a global recession. The problem is, most people and economists cannot agree on when a recession begins or ends. There are too many definitions of what a recession is. Is it based on GDP? Traditionally, 2 consecutive quarters of negative GDP defines a recession. Is it based on unemployment figures and retail sales numbers? Many now believe that a better way to gauge a recession is by looking at the business cycle from peak to trough. The average recession, we are told, lasts about 10 months to a year. But who cares about all this anyway? It's just a way for the media to sell ads by reporting negative news of doom and gloom in the world. Have any of these reporters been out to eat lately? Every time my family goes out for dinner, we have to wait in a line for a table. The parking lots are full of people wanting to dine out. It would appear to me that restaurants are not in a recession. If things were really as bad as the talking heads on TV say they are, then we should be stocking our shelves with peanut butter and jelly and baking our own bread. Walmart just reported better than expected sales for the 3rd quarter and are optimistic about the Christmas shopping season. Will children be disappointed by what Santa brings them this year? Now to be sure, some stores are suffering. Circuit City has announced their bankruptcy. Car dealerships are going out of business. But these are big ticket items that people have discovered they can live without or postpone to a later date. Everyone has to eat right? I think this recession has to do more with perception than reality. In fact, there may be a silver lining here. People are discovering that there is a difference between wants and needs. The credit crunch was caused in part by too many people buying things they did not need on credit. Maybe stores will bring back their layaway programs of old and let people save up for that next big screen TV set. Maybe banks will bring back the passbook saving accounts and stamp your interest posted with your latest deposit. Back to the basics may come back in vogue.

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