I think we're in a recession right now. I'm looking at
these new consumer confidence numbers that just came in recently, showing a steep 7.7% drop-off just since the government shutdown began. That's very worrying because consumer confidence levels are considered predictive of consumer spending levels; consumer spending accounting for the vast majority of economic activity. To judge by the stock markets, Wall Street foolishly doesn't seem worried yet, but they also don't yet have firm numbers on the on-the-ground impact until the start of next month at least and don't know what the duration of this shutdown will be yet. I may be "going out on a limb" to say that this is the start of a recession, but the last time I predicted that we were in one (which was in December 2007 on the old Matrix Fans Network forums), I was "going out on a limb" then too and proved to be right: a subsequent report released in 2009 revealed that the Great Recession had, in fact, begun in December of 2007.
My gut tells me that we are in a recession right now because everyone knows that our economy is being driven by debt (governmental, corporate, and individual) and that
40% of Americans don't have $400 to spare in case of an emergency, and under such conditions anything that reduces the influx of additional money into circulation, such as a new round of tariffs, an increase in the Federal Reserve's interest rate, or...a government shutdown...could touch one off. Any sudden shock could be the straw that breaks the camel's back. My gut tells me this is it: this is the straw. For now, consumer confidence, which is now at the lowest level it's been since before Trump was elected, remains high compared to the worst points of the Great Recession, but it also took some time to reach the lows before, not just one month. The linked Quartz article in the first paragraph optimistically reassures us that "If the politicians in Washington, DC can manage to fully reopen the government, optimism could quickly return." The thing is that I don't see that happening, do you? This particular shutdown very much appears to be indefinite. Nobody believes that the two bills scheduled to for a vote in the Senate on Thursday will pass, so we'll definitely conclude a fifth week with a closed government, no solution, and no end in sight. The shutdown is already becoming much less "partial" and more all-out disastrous than it originally was. I think this shutdown is indefinite for at least the duration of tax season and maybe even the rest of the Trump presidency, and that, accordingly, you're going to see consumer confidence continue to drop and observe a reduction in consumer spending with it, businesses (especially those contracted by the government) start to shutter, and the unemployment rate and rates of homelessness and bankruptcy rise in accordance with all these other things. I don't see any reason for optimism in the current situation and feel that the stock market too is about to get a rude awakening when the first hard data starts to come in in a couple weeks. What do you think?
We won't know officially if this is the start of recession for most of the year, of course, given what the definition of a recession is (at least six months of negative growth), but my gut tells me that it is. What say you?
The Economics and Political Science Room
Originally Posted by IMPress Polly
I think we're in a recession right now. I'm looking at these new consumer confidence numbers that just came in recently, showing a steep 7.7% drop-off just since the government shutdown began. That's very worrying because consumer confidence levels are considered predictive of consumer spending levels; consumer spending accounting for the vast majority of economic activity. To judge by the stock markets, Wall Street foolishly doesn't seem worried yet, but they also don't yet have firm numbers on the on-the-ground impact until the start of next month at least and don't know what the duration of this shutdown will be yet. I may be "going out on a limb" to say that this is the start of a recession, but the last time I predicted that we were in one (which was in December 2007 on the old Matrix Fans Network forums), I was "going out on a limb" then too and proved to be right: a subsequent report released in 2009 revealed that the Great Recession had, in fact, begun in December of 2007.
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