Neel Kashkari, economist and politician who is the president of the Federal Reserve Bank of Minneapolis said recently, according to zerohedge.com that "IT DOES NOT FEEL LIKE A RECESSION NOW".
Well, the man might be right, you know... I don't live in the US, but when I look around I don't see any sign of a recession yet either. There are indeed a lot of signs of high inflation, the purchasing power of our national currency being literally crushed for the past few months, but no sense of recession yet.
But what is a recession?
A recession is a significant, widespread, and prolonged downturn in economic activity. Because recessions often last six months or more, one popular rule of thumb is that two consecutive quarters of decline in a country's Gross Domestic Product (GDP) constitute a recession.
source
Tbh I was expecting to see my country, Romania, already in a full-blown recession by now, but surprisingly we're actually not. Even the data regarding Romania's 2022 GDP is looking... well, quite decent I'd say.
The Romanian GDP grew by 5.3% yoy in the second quarter of 2022, beating market consensus of a 3.5% growth, following a 6.4% gain in the previous period. It was the fifth straight quarter of expansion in the GDP, amid a lifting Covid-19 restrictions, preliminary estimates showed. On a seasonally adjusted quarterly basis, the economy advanced by 2.1%, after a 5.1% rise in the first quarter of 2022. In the first half of 2022, the economy expanded by 5.8% from a year earlier.
source
According to the data shared by trading economics The Gross Domestic Product (GDP) in Romania is somewhere around 280 points and is forecasted to climb as high as 300 in 2023, and just to put everything into perspective we had a GDP of 172 points in 2012 and 177 in 2014.
No signs of recession, sir. Or better said... there are no signs of a recession so far.
I was talking with a friend today and she was telling me that she was looking lately for some accommodation at a ski resort for the winter holidays... Believe it or not but she didn't find anything free atm... And it's mid-August...
Worth mentioning is also the fact that despite the price of fuel being insanely high imo, traffic is no different than it was just one year ago. Now, I'm not an economist, far from wearing that stigma, I'm just a simple-minded man searching for clues in proving wrong my biases, and believe me there's no clue that I could find showing that we are currently in a recession.
The situation in my country is that most of the inhabitants have basically no financial education and they don't even see a potential problem for the economy in the future. Most of them just see all this shit with prices skyrocketing as being something temporary... Just like a bump in the road that doesn't necessarily have to break the wheels.
I really hope shit won't hit the fan, but I doubt we're gonna get out of the inflation tunnel without a recession. Or I am just overly pessimistic... What do you think?
Thanks for your attention,
Adrian
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It is coming and will affect everyone. I can see it here already and you will see it there if you just look. Retail will be down along with stock movement as there will be a surplus. Government workers will never say there is a recession as they are the least effected. People would have booked holidays months ago so don't be fooled about no accommodation.
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My people are pretty ignorant... I'm sure of that.
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Neel Kashkari works for the government. Government workers are the very last people to feel the effects of a recession.
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They never feel it.
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Very interesting approach to this case. In my opinion, we may in a really not long time be strongly surprised if the actual recession starts. The question now is only whether with this event there will be a situation in which housing prices and wages will go completely crazy or whether we can expect a completely different type of recession.
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dudes way out of touch with reality like most of those people
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I agree. I don't see any signs of it in here though.
For now, the signs of a recession are still muted. If people believe the situation to "be under control" and temporary there is likely little adjustment to their daily lives.
Once realisation kicks in that this is not temporary but something they need to cope with over a longer period of time, then the adjustments will become more noticeable.
My parents are now in their early-to-mid 80s and inflation is already beginning to eat into their daily expenditure. And this is before the announced increases (at least doubling) in energy costs over the winter.
Businesses are facing a six-fold increase in electricity costs in the next few months. People will notice this and make adjustments.
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I think, possibly, it is because it is expected that if the USA suffers financially, that other countries will also feel the suffering as a result of dependence on the dollar. This may be true in the aggregate. However, it does not always directly translate to the individual consumer who does not have to deal in dollars.
Obviously, this does not hold true for all countries. However, perhaps Romania is not so dollar dependent as other countries in Europe. I don't have any data to back up this thinking.
Alternatively, we may learn from the experience of Ernest Hemingway with regards to going bankrupt. He said that he lost everything slowly at first, then all at once. So, the economy may be experiencing something similar.
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