According to a recent CNN poll, nearly 3 out of 4 Americans think that we are in a recession. Naturally, I figured it would be interesting to pose the same question to the readers here to see where our generation stands in terms of thinking about a recession. But first, we have to define recession.
The true definition of a recession is a decline in GDP for two consecutive quarters. That being said, if we look at the last quarter of 2007, the real seasonal adjusted GDP was 0.6. It was positive, but just barely. We’re closing in on the first quarter of 2008, and it will take some time before we know exactly what has been going on, but experts believe GDP to be very low or negative. While this alone wouldn’t immediately classify as a recession, this strict definition is just the tip of the iceberg.
Effects of a Recession
All definitions aside, an economy that is lacking growth is felt in many areas. It affects employment, financial markets, corporate profits, and much more. Even more important is the effect of inflation or deflation during this time, which can definitely be felt by individuals. These are the effects that we all feel on a daily basis, and it doesn’t matter if we don’t meet the two consecutive quarters of negative GDP or not, these are real.
So, what do you think? Have you begun to feel the effects of a recession, or are you hearing all of this talk in the media without noticing many negative impacts personally?
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.