August 14, 2001

It's Already A Recession

As the saying goes, if it walks like a duck and quacks like a duck, it's a duck. Or is it?

Technically, the US economy has managed to skirt a recession so far. GDP has not yet fallen into negative territory. And even if it is revised to negative growth in the second quarter, we'll have to wait until the end of the third quarter to find out if the economy is officially in a recession.

But does it matter, really? If asked, most businesses in the manufacturing and tech sectors would say they're already in a recession. The manufacturing sector has been contracting for a full year now. Tech sector businesses have seen their market cap erode, business spending shrivel up, sales practically disappear, and workers axed in droves.

And the slowdown appears to be spreading to the retail sector as well. Retail sales were stagnant last month -- holding steady only because deep discounts lured in shoppers. Consumers are clearly buckling under the pressure of increasing unemployment and mounting debt burdens. And as the slowdown continues, consumer spending will surely be the final straw to break the camel's back.

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