Recession?

A recession is a downward tick in business activity – loss of jobs, increased bankruptcies, mortgage foreclosures, avoidance of loan risk by banks, and instability on the stock markets. There are other symptoms of a recession, but those are the main ones.

It can be argued that we have been in various stages of recession from 2009 until today. The mortgage meltdown and banking fiasco of 2007 to 2009 was a major cause. That recession was worldwide. It was one that started in the US and spread to the global community because we sold faulty loan investments to other central banks overseas. That recession was long and deep. Many wondered if we were entering a depression. Loss of jobs was huge and long-lived.

Once we pulled out of that slump – the depression never happened – we went on with our heady reinvention of American commerce. The economy recovered beautifully until the pandemic occurred in 2020. Job loss. Enforced isolation. Working from home. Reliance on electronic everything became a thing. At first, we worried we would enter a deep recession and perhaps a depression. The latter did not happen, and the former was somewhat present. The ability of the American people to pivot to new behaviors to replace the old ones renewed the economy in surprising ways. Corporate overhead costs dropped. Commercial activity regained momentum. A hardy new economy took shape, and we are still on that re-invention process. Old careers disappeared but were replaced by a swirl of new ones.

Inflation followed supply chain disruption caused by the COVID pandemic. That supply chain is still in shambles but reforming. Shortage of key materials and parts continue to hobble manufacturing and retail markets. Arguably this has caused a recessive impact on the economy, here and abroad. Adjusting through these difficulties is an act in progress. Certainly, there will be ups and downs during this phase. Some will feel the teeth of recession; others will soar through the difficulties.

One thing we learned in the pandemic – and some of those pressures will continue for some time yet – is that Americans are awesomely creative and inventive. New products, services and technologies continually push economic activity to new heights. Disruptions in old industries is inevitable. Supplies will hamper manufacturing and housing for years to come. We will work our way out of those problems and invent new answers to emerging problems. In turn those developments will fill in the gaps made by failing components of the economy. Some people will benefit wildly; others will be lost in the chaos. Adaptability will be key in coping with the continuing sea changes.

So, will recession happen? Maybe, maybe not. The pandemic taught us that both negatives and positives often exist side by side. The net effect is no recession statistically. That does not negate the reality of career loss and disruption for those so affected. Change always has these effects. Best we learn to live with them and prepare for future challenges.

June 22, 2022

 

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