Bloomberg writes this morning that "the recession calls are getting louder on Wall Street, but for many of the households and businesses who make up the world economy the downturn is already here." To many, the story says, "the technical definitions of a recession - traditionally two quarters of contraction - are irrelevant."
Bloomberg goes on:
"Goldman Sachs Group Inc. economists put the risk of such a slump in the US in the next year at 30%. A Bloomberg Economics model sees a 38% chance in the same period, with the risks building beyond that time frame. But for many it already feels like it’s here. More than one-third of Americans believe the economy is now in a recession, according to a poll last month by CivicScience.
"The worries among small business owners, consumers and others are illustrated by so-called Misery Indexes, which blend unemployment and inflation rates. The gauge for the US is already 12.2%, similar to levels witnessed at the start of the pandemic and in the wake of the 2008 financial crisis, according to Bloomberg Economics … The reason? Prices are soaring worldwide, particularly for essential foods and fuels, eroding the spending power of families. Central banks are responding to the inflation surge, but as they push up interest rates that turns the screw on those with debts. Workers are complaining their wages aren’t keeping up with the cost of living, a frustration that’s already led to strikes in some countries.
"Quite simply, people’s money is disappearing fast, and they’re worried it could get a lot worse."
- KC's View:
This reflects something I am hearing frequently from retailers - that their numbers suggest that a recessionary mindset - if not an actually, economist-certified recession - has taken hold among shoppers.
One of the problems is that while an actual recession may be short and shallow, the mindset may last a lot longer and be a lot deeper.