The Recession Has Started

The economy has posted two quarters of no GDP growth. That is said to be a recession. However, economists are prepared to debate whether this yardstick is realistic. Perhaps the best yardstick, although not scientific, is how people feel. It drives their consuming habits, how many people they employ and whether they will look for another job, give money to charity or buy a house. These are the true levers of the American economy. (Click here for the best and worst state economies according to the new Prosperity Index.)

A new poll from Morning Consult shows that almost half of Americans believe the economy is in a recession already. Another 25% expect one to come within a year. To make the distinction sharper, only 10% believe we are not in a recession or will be in one during the next year.

Another bit of bad news is that almost half of Americans would like to prepare for a recession but wish they could. This gives credence to surveys that show many Americans have almost no money saved if they face an emergency. While consumers had near record savings until recently, that must have been held in relatively few hands.

If the poll results needed more buttressing, the Conference Board Expectations Index in December (based on consumers’ short-term outlook for income, business and labor market conditions) was 76.7. A figure below 80 signals a recession.

Perhaps one reason this recession is hard to call is because it is not like the last one, which is seared in people’s minds. The Great Recession crippled the economy so badly that it will be in the history books indefinitely. This recession is softer, except to those Americans who are hammered by the outcome.

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