Does a "Recession" Really Matter?

Lots of recession talk lately. Correction: Been lots of recession talk for months - make that years - now. But why discuss? Either there is/will be, or there isn't/won't be.

It's tricky.

Is there? The arguments against a recession now use numbers. Then again, the arguments that there is one use numbers too. There's a good illustration of this HERE. This guy is good. And he argues against a guy who's supposed to be pretty smart. The smart guy says no recession. The good guy says recession.

I'll go with the good guy. No, not based on his numbers - although they're carefully delineated. I go for it because, well, those of us who aren't rich or rich-rich have been struggling with inflation for a while now. And that struggle entails paying more for stuff we need, causing us to cut back on stuff we'd like.

And then there are those who walk the line - the one between survival and...well, some other state. They've been treading water for years. And they've go not room for error. Increases in stuff have caused said folks to, for example, cut down on visits to fast food joint like McDonald's. 

You've heard about all that, right. The fast food joints have been trying to get their customers back, after a fall off in sales. Don't know if it's working or not. But you understand why these folks have cut back, right? They just don't have the money to buy that whatever-it-is that they think they should spend their money on to fill their tummies. 

Anyway, the not rich, not rich-rich feel the pinch or the squeeze (take your pick). Is that a recession? Ya think?

But what about those numbers - the ones that say there's no recession?

Well, we could get into this and join the fray. But instead of that, we'll just point out something we've noted in the past. GDP - the number that typically tells us there's a recession when it goes negative - includes government spending. Government spending has been through the roof - as in through the roof for a long, long time now. Is robust government spending a sign of a healthy economy. Well, it could be if the money spent was money they had in the bank so to speak, because of healthy tax collection due to business booming and folks making a lot of money. But that's not the money they're spending. We know that because deficits have gone through the roof. And measure how much the government is spending over and above what they're taking in. 

The deficits are huge. Huge as in HUGE.

So there's nothing healthy about this.

Hmm...when you think about it, if the government keeps up its spending could there ever be one of those "official" recessions. Spend enough and the GDP remains positive, even as the actual economy slows and slows and...slows.

Well, where are we now? At the least, it looks like a chunk of us are feeling "recession" no matter what the technical definition is and whether that technical definition had been met. 

As for the original question - Does a recession really matter? - whadda ya think?

The fact is, recession do come from time to time. And if the government wasn't constantly trying ot prevent them by any and all means, they do serve a purpose.

They come because monetary and fiscal policies pump money into the economy, causing lots of bad investments. Folks get cheap money and they go crazy investing in all sorts of middling or bad ideas. The economy pumps itself up beyond any reasonable levels. The bubble blows up. When it finally bursts - or maybe just deflates - things come back to a more reasonable state. So the recession sort of cleans up the mess that that monetary (what the Fed does) and fiscal (what the government does) policies create.

Of course, when these two bad boys overdo it - which they do as a matter of course - they can cause conditions that end up with a recession as in RECESSSION. And that sort of recession isn't just a clean up. It's a slap down. And it hurts.

As for the current recession - if indeed there is one - so far it's not quite a slap down. Maybe.

And as for whether a recession will or won't happen (for those out there who think one's not happening right now), well, predictions aren't worth much more than the napkin they're scribbled on.