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Are we or are we not in a recession? By: Jonathan Bille  |
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 Technically we are not in a recession based on the official definition that states; for there to be a recession you need two quarters of negative growth in the GDP.
So why are so many around the country financially hurting. There are a lot of reasons. The first is obviously the declining value of the US dollar. As the value of the dollar decreases you need to spend more for the same items you usually purchase. Second is stagnant and declining wages. As good paying jobs are shipped over seas, labor is forced into lower paying jobs. Third is the rising cost of energy. As the price of gasoline and heating fuels go up, it causes consumers to cut back on spending in other areas so that they can buy the fuel they need to survive. Add to all this the mortgage crisis, increasing health care costs, rising food costs and a tax code that favors big business and you can start to understand why so many are hurting so bad.
So why doesn’t the government just come out and say we’re in a recession?
The answer is complex, but it mostly has to do with perception. Undeniably claiming that the country is in a recession could actually do more harm than good. When consumers believe they will have less money tomorrow than they have today, they cut spending. That cut in spending drives the GDP down even further, making the problem even worse. That is why President Bush asked the nation to continue shopping after 9/11. Not because he was clueless about what to do (although I agree that point is debatable) but because he feared a sharp cut in spending could make the bad situation that was 9/11 even worse.
Ultimately, perception is everything. If you make more than $100,000 a year, you probably think the economy is hurting a little but that it is just a temporary dip, soon to rebound. If you make less than $30,000 a year, your perception is very different. You probably think the economy awful and getting worse everyday. On the flip side, if you’re making more than $1,000,000 a year, you probably think the economy is doing just fine.
So are we in a recession. It depends on your point of view.
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