What Does "Recession" Mean?
These days all you hear about on the radio or read about in the newspaper are the interest rates, the housing market, the Federal Reserve or the "recession."And its not only in the media, bring the subject up at any gathering and people will pile on that subject like there's no tomorrow.
So what is a "recession"? Basically its "less". Less than last year, less than the last five years. We're producing less, we're making less. Not everyone is earning less, but some people are. It starts with the builders and manufacturers, and works through the system until lots of people are making less. And even if you don't end up making less, all this talk about a recession may make you tighten up on your spending, which in turn just keeps feeding the recession.
The real question is are we in a recession? I would say, (The views expressed here are the views of the individual author and his views alone. Community National Bank does not express an opinion regarding the author's views. The views expressed may or may not coincide with Community National Bank's view of the economy. The following should not be viewed as economic advice to anyone reading this, or Ben Bernanke, or the Federal Reserve.)"Yes." Others may disagree, but based on my definition above, I think the media has talked us into a recession.
Some good things that come out of a recession are that people tighten up on their spending. During a recession people save money! During a recession people pay off debt! So its not the end of the world, and I realize there are plenty of builders and laborers without work right now, and that is unfortunate. But we live in a country where people have come to expect "more" every year and in every way. People want more, and more, and more. And that is just not how an economy works. There will be ups and there will be downs.
I hope this brief explanantion helps. Perhaps you can form your own opinion on whether we are in a recession or not. Hopefully you'll understand what everybody else is talking about at your next gathering.
So what is a "recession"? Basically its "less". Less than last year, less than the last five years. We're producing less, we're making less. Not everyone is earning less, but some people are. It starts with the builders and manufacturers, and works through the system until lots of people are making less. And even if you don't end up making less, all this talk about a recession may make you tighten up on your spending, which in turn just keeps feeding the recession.
The real question is are we in a recession? I would say, (The views expressed here are the views of the individual author and his views alone. Community National Bank does not express an opinion regarding the author's views. The views expressed may or may not coincide with Community National Bank's view of the economy. The following should not be viewed as economic advice to anyone reading this, or Ben Bernanke, or the Federal Reserve.)"Yes." Others may disagree, but based on my definition above, I think the media has talked us into a recession.
Some good things that come out of a recession are that people tighten up on their spending. During a recession people save money! During a recession people pay off debt! So its not the end of the world, and I realize there are plenty of builders and laborers without work right now, and that is unfortunate. But we live in a country where people have come to expect "more" every year and in every way. People want more, and more, and more. And that is just not how an economy works. There will be ups and there will be downs.
I hope this brief explanantion helps. Perhaps you can form your own opinion on whether we are in a recession or not. Hopefully you'll understand what everybody else is talking about at your next gathering.
posted by CNB at 1:23 PM
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