Yes, We Might Finally Be In A Recession
So while I’ve disputed it for a long time, it appears the US may finally be in a recession. No I don’t know this for sure but it seems likely that we are in a recession that began in July 2008 (the start of the first quarter to show negative GDP).
While it appears likely the we have finally entered a recession, I’d say it’s far from a sure thing. You may have noticed prices at the gas pump are half of what they were 4 months ago. While I imagine for most people fueling their vehicle is actually a very small part of their overall budget, that $20-$30 extra bucks every two weeks for some reason makes people richer/poorer depending upon which direction fuel prices are going. What’s really funny is the government could raise taxes an equivalent amount and nobody would blink an eye. But display that price at the pump and people complain. Along with the cheaper fuel, lower prices for everyday goods are likely to follow. The American consumer is far from dead.
So then we have the media effect. Right now it’s “cool” to be frugal. Clip some coupons and shop at the discount grocer and you’ll get an article written about you. Suddenly saving money is big news. Fortunately, for the most part America’s sense of economics is not too keen. While people will try to be frugal, they’ll be largely unsuccessful. They’ll read that flat panel TV’s use less power than CRTs and run out and buy one to save on their electric bill. They’ll drive out of their way to save $0.67 at the discount store. They’ll sign up for their cable providers “bundle” offer to save them money and end up with a higher bill in the end. They’ll be lured to the mall by offers of 50% off but neglect to notice that the original price has been market up.
Time will tell, but we’ll see where the economy goes from here. My opinion is that reports of the death of the American consumer are greatly exaggerated.
