We are OFFICIALLY in a 2008 RECESSION

A 9% [680 point] drop in the American Stock Market broke the proverbial bears back, yesterday, when the National Bureau of Economic Research officially declared that the US is experiencing a "recession". The New York Times has the full story.

What is a recession?
By popular definition a recession is two consecutive quarters of GDP loss. Unfortunately, we don't have the resources to immediately evaluate the state of our domestic economy. Therefore, it takes us months to determine whether or not we have actually been experiencing a recession or not. It turns out that we have, in fact, been in a recession since the last quarter of 2007.

How long will we be in this recession?
"Some people in the US say it could last for 3-4 quarters...This recession is compared to that of 2000-01 and 1969-70." Citation With any luck we'll be out of it before too long.

However, this recession may be incomparable to any other we've experienced in the memory of this nation. If we’re entering an economic cycle that Alan Greenspan called, “a once-in-a-century credit tsunami,” then we have only the 1930s — the last time a credit bubble burst — to compare it to. The U.S. economy was officially in recession from 1929-33 . Followed by four years of stagnant to limited growth. Then 13 months of recession again, in 1937 and 1938.

In terms of GDP, it took 10 years to return to pre-1929 output. Again, history doesn’t repeat exactly, but in economics and politics, we often have to learn the same lessons over and over.

We rely on, what are called, leading, lagging, and coincidental economic indicators to reveal and predict the direction, state and future of the economy. The Conference Board, a non-governmental organization, measures these indicators through key variables, such as the S&P 500 stock index. These indicators have been providing strong indications that we've been experiencing a recession for months now. During that time, American citizens have experienced fear.


What is the role of FEAR in a recession/depression?
Is it a cause? Is it a catalyst? Is it a product? Could it be all of the above? My feeling is that a recession can begin with a small degree of economic corruption that gradually spreads it's roots until even major banks and lending institutions are caught up in the roots and are forced to declare bankruptcy. When the foundational institutions of our economy, the ones that directly affect us, are in jeopardy, THAT is when fear strikes the populous and acts as a catalyst for provident living. When the consumer is not demanding goods, employers are forces to lay off workers with increases national unemployment. Unemployment was one of, if not the greatest, challenge of the Great Depression. More evidence of recession that surrounds the consumer, the more cautious and frugal he becomes. And the fear-driven, cyclonic recession continues. See what emotions are affecting those on Wall Street.

However, according to the National Retail Federation (NRF), shoppers spent $41 billion in the four-day Thanksgiving weekend. That averages out to $372.57 spent by the average shopper. Surprisingly, that number is up 7.2% from a year ago. So that makes me wonder, are consumers really "afraid"? Do consumers really have the great economic influence that I stated above?

Take some time to think about this, and then, I'd love to hear your thoughts on the role of FEAR in this recession...

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Listening to: OneRepublic - Come Home (Featuring Sara Bareilles)