But If Feels Like A Recession

We’ve all heard the old adage, “You’re only as old as you feel!” That wise saying has often proven true as some elderly people can be extremely active, because they feel much younger than their age indicates. Meanwhile some younger folks limp around as if they were decades older than their actual age. It seems that the same maxim can be applied to our current economy.

While the government-produced GDP numbers continue to show a growing economy (latest numbers were even revised upward), it certainly feels like we are in a recession. The latest jobs data this week showed a worse than expected increase in jobless claims, while the unemployment rate shot up to 6.1%. In addition, sales at retail stores were very weak and auto sales continue to plummet. Almost every major auto manufacturer recorded a drop in Y/Y sales for August. In fact, Chrysler saw sales drop 34% last month.

Even the lone bright spot – falling gas prices – is actually a negative. That’s because gas prices are dropping due to decreasing demand worldwide for oil. And while gas prices are down from their summer highs, we are still currently paying much more than we did last year. This is true for almost every major commodity, as budgets are being squeezed by escalating costs at the grocery stores.

Not to be forgotten, the stock market has certainly reacted this year as if we are in the midst of a recession. The S&P 500 has fallen over 15% since the beginning of the year. Meanwhile, the Dow is down over 20% from its high of last October. Even a late summer rally seems to now be giving way to realization that the economy is not going to improve anytime soon.

So the reality is that the latest GDP numbers give a very deceiving picture of the true health of our economy. Our economy has slowed to a crawl and over 600,000 workers have already lost their jobs this year with little prospect for improvement in the coming months. So while the GDP numbers may tell a different story….it definitely feels like we are in a recession.