Rancho Santa Margarita Blog

This seems to be the unanswerable question. Journalists and analysts were asking this question over a year ago and are still unable to answer with any divinity today. The reason for the uncertainty stems from contention over the definition of the word “recession.” The traditional definition necessitates that an economy endure two straight quarters of negative growth before it is classified as a recession. By this definition, we are not in a recession. However, this definition is problematic for several reasons. Most notably, growth may not be a reliable indicator of improvement in the overall economy. For instance, oil companies are recording record profits this year, figuring into overall growth trends. But those gains come at the expense of millions of consumers and businesses.  So, while oil companies technically grow the economy, most sectors of the economy perceive this growth negatively. To complicate things further, growth is immeasurable for at least 6 months after a quarter ends. Most conservative analysts will tell you that a good two years must pass before accurate data can be collected and understood. In fact, our last recession ended before economists concluded we were in one. Once you eliminate the standard definition, you are left with an array of contending classifications, which explains the current difficulty in describing our period as a recession. However, most analysts will tell you that enough economic indicators are in decline to classify this period.