Tuesday, February 19, 2008

Define "Recession"

Just as a reminder.

A recession is where economic growth stops, and you are left with flat to contracting sales.

Note that economic activity does not grind to a halt -- the year-over-year growth rate merely slips into the negative. This is often misstated, in some variation of "Gee, how it can it be a recession -- I was out shopping and the stores were pretty crowded." Whenever you see that, the speaker is either technically misunderstanding what a recession is -- or alternatively, is painfully long and hoping for the best.

One of the Radio Boyzzz uses restaurant parking-lots as his economic gauge, and mentioned it often yesterday. He represents a lot of folks.

Oddly, he specifically mentioned "auto sales" as an indicator. Had he checked around on that score, he would have found that all those cars in restaurant and WallyWorld parking lots were there because they were NOT in auto-dealer parking lots, where their owners were purchasing new cars.

Or he could have read the newspaper last week--wherein it was announced that the State of Wisconsin's income- and sales-tax revenues were falling off the shelf--usually a fairly good indicator of reduced economic activity.

Oh, well....

1 comment:

Disgruntled Car Salesman said...

NO ONE, and I mean NO ONE, is buying cars right now. The weather ain't helping either.