Monday, May 26, 2008

A Recce on the Recession

Have fears of recession receded?

The past few months have seen great disquiet being expressed on just about every aspect of the economy. Pundits have averred that the US - and hence the world - economy is teetering on the brink of a recession. Learned observers have even prophesied the worst economic recession in many decades.

However, I have been getting a sneaking suspicion in the last couple of weeks that talk of recession has been flagging. To check whether this feeling is true, I decided to do some reconnaissance.

The New York Times opines today that "the most dire recession fears have started to abate". CNBC says that indicators show a weak economy, but no recession. Forbes assures us there is technically no recession so far (we would have felt more reassured if that article's title was not qualifed by the word 'technically' !). The White House, of course, continues to insist there is no recession*.

Google Trends shows searches for the word 'recession' peaking in late January 2008 and falling off since, with a decided downtrend since early April 2008. (Interestingly, the word 'subprime' too shows a declining trend since early April 2008).

So, have recession fears truly receded? It does appear so - but not so fast. The hallowed Wall Street Journal says there is likely to be a 'sort of' recession, but that the economy is going to hang in there, if barely. Warrent Buffet goes much further, saying the US economy is already in recession!

And then there are those who, somewhat stoically, say it doesn't really matter - that economic growth in most major world economies has slowed down so much that the person on the street is feeling the bite. And as long as that's true, the technicalities don't matter a great deal.

The horse sense view tends to agree.
* but then, they also say there never was one, and never will be!