We were promised a recession --- now, where the hell is it?
If it walks like a duck, it quacks like a duck, well you know the rest. But as far as recessions are concerned, this duck just won’t hunt!
The credit markets are in a shambles. Oil and gas prices are slicing through uncharted territory, food prices make the “Dollar Menu” at MacDonalds look attractive and unemployment is climbing.
So, where’s the recession?
According to Merriam Webster, my daughter’s high school econ teacher, and the guy who makes my non-fat macchiatos at Starbucks, a recession is defined as “two consecutive quarters of economic contraction.”
Damn … despite record food and energy prices, despite the collapse of Bear Stearns and the precarious position of Lehman Brothers, last quarter, the U.S. economy actually expanded by nearly one percent. What a rip off!
Oh, how times have changed. Twenty years ago, five percent unemployment was seen as full employment. Today, it’s causing a panic.
During the “Great Stagflation” of the late seventies and early eighties, the inflation rate was eleven percent. While most of us are suffering sticker shock, and the price of gasoline has inspired a new generation of couch cushion explorers, the adjusted inflation rate is only four percent.
Apparently, it’s not as bad as we think.
To make matters worse, today, the ISM (Institute for Supply Management) reported that domestic service industries expanded at a faster pace that initially projected for May. An ISM measure below 50, is an indication that the economy is contracting. During May, non-manufacturing industries, which comprise nearly ninety percent of our
economy, landed an ISM score of 51.7.
Yesterday, Fed Chair Bernanke signaled that his campaign of rate cuts may be an end. What’s next … are we going to find out that the President’s rebates really worked!
Look, I’m an American, I want someone to blame. If this were a “real” recession, I’d get the chance to point the finger at the culprits. It wouldn’t matter to me whether it’s the President, the Congress, the Fed Chair or my barber. I’ve got a right to bitch and moan. But, if this is not a recession, what am I complaining about?
GET IN LINE …
To learn more about my market recommendations, visit my website at:www.globewestfinancial.com.
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