#276: The Recession Is Always

in the Past

In my previous post, It’s Time To Become a Skeptic Again, I suggested the best way to view the economy is as a skeptic. But that blog is already in the past, so here’s another (nonsense) reason you should be a skeptic today. At least about the economy.

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The Recession Is Always in the Past

Tell me, how do we define a recession? Let me remind you. We have a recession when a country’s gross domestic product, its GDP, shrinks for at least two consecutive quarters.

(And a depression? Well, a depression is a recession that is more severe and lasts longer. That’s why it’s so depressing.)

The really important part of the recession definition always seems to get lost when so-called experts talk about recessions and depressions. Did you spot it? It is that bit about “for at least two quarters.”

Why is that significant? Well, it tells you we never actually know whether we are in a recession. You see, a recession is always in the past. Economic data is historic because it takes months to gather.

So how do we know that this quarter is part of the recession? We don’t. Not yet.

Until we know, you have options. You can act as if we are going into a recession, or we are in a recession. Or you can behave as if there is no recession (at least not yet), or as if the recovery has begun.

There you have it. A recession is a choice. A mindset choice. Who knew?

Welcome to my side of the nonsense divide.