Are We Already in a Recession?

A recession is a period of economic reduction, where businesses see less demand and begin to lose money. To cut costs and stem losses, companies begin laying off workers, generating high unemployment levels.

Attempts of preventing the spread of the COVID-19 pandemic may have been fairly successful so far; however, the economic standstill and the millions of workers that have lost their jobs is now the highest in the history in the U.S.

False starts showing signs of improvement in mid-March gave hope but immediately disappeared.

Unfortunately, the long-expected recession has finally entered the picture. Recent, unprecedented health events were a definite catalyst, influencing a quick entry into this economic downturn. For the last several months, the economy has been on hold.

Record economic expansion has had its run for over 10 years. Indicators show that the economy of the US entered recession near the end of March 2020.

What makes this recession unique is that the government, in its attempts to stop the spread of the virus, inadvertently brought it on. The government’s hope is for an economic bounce back later this year once the virus is contained. If so, this recession would be one of the shortest on record, stocks would lead the economy to better times as they have done historically. Coronavirus is not yet contained and there is no way to predict when that may happen.

The worst effects from such a massive shutdown of worldwide commerce enhanced by the numerous ‘stay in place’ orders are yet to be seen. The burden reaches much further than financial markets. The physical and mental well-being of most of the world’s population has had massive psychological effects that will continue to affect all aspects of societal interaction with regard to all areas of life.

Some of these pent-up emotions are being exhibited through the explosion of racial equality demonstrations as people take to the streets, many peacefully, protesting a righteous cause, while others using as an excuse to riot and loot.

A recession is not ‘Official’ until The National Bureau of Economic Research (NBER) determines and declares it as a recession. This determination usually takes place well into a recession or even later.

Contrary to popular belief, the NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement from the NBER’s Business Cycle Dating Committee.

Official yet or not, a safe assumption is that NBER will eventually declare March 2020 as the start of a recession. This last economic expansion continued for a record 128 months, more than double the average expansion length, topping the previous record from the 1990s. Despite that it was the longest expansion in history in terms of gross domestic product (GDP) growth, its gain was exactly 50% in nominal GDP which is average.

Bottom Line:

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– Alan David Kosinski, Life Extraordinaire

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In each future article I’ll take you closer to more abundance through empowering and educational articles. Until then, see if you can discover ways to immediately implement what you learned from today’s message.

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