Are We In A Recession?
A recession can be defined as "a significant decline in general economic activity extending over a period of time." Are we in one? Yes, I believe that we are. But because economists must look backwards in order to measure economic activity, we won't know whether we're in a recession, how severe it is, or when we've come out of it until after the fact.
Why do I feel we're in a recession? Before I answer that directly let me tell you a little joke about how you know when you're in a recession. You know that we're in a recession when your neighbor loses his job. You know that we're in a depression when you lose your job. And you know when we're in a recovery when the president loses his job.
But seriously, one of the reasons that I feel that we're in a recession is that I'm seeing some anecdotal evidence of a softening labor market. College students are increasingly pessimistic about their job prospects. Employers who on the record are talking about paying larger signing bonuses this than last year are off the record telling me that they're deferring the extension of job offers for months so that they can be more sure that they're not going to have lay off those new graduate hires even before they start.
The last time that I heard talk like this was in 2001 and shortly afterwards it was evident that we were in a labor market slump. It took several years to come out of that recession. I hope that economists are correct in predicting that the recession that we're likely in will be short and shallow.
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