Are We Already in Recession?

How shocked would you be if it was announced that the U.S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters?

Would you really be surprised to discover that the eight-year long “recovery,” the weakest on record, had finally rolled over into recession?

Anyone with even a passing acquaintance with the statistical pulse of the real-world economy knows the numbers are softening.

— Auto/light truck sales: either down or off a cliff, depending on how much lipstick has been applied to the pig.

— Restaurant/dining sales: down.

— Tax receipts: down.

— Retail sales: flat, stagnant or down, depending on the sector and if the numbers have been adjusted for inflation/loss of purchasing power.

— Rents in high-rent regions: finally softening after years of relentless increases.

— Consumer debt: hitting new highs.

— Corporate profits: stripped of gimmickry, stagnant or down.

Those who study recessions know that employment often tops out just before the economy rolls over into recession. Strong employment is the last gasp of an expansionary phase.

There are several fundamental reasons why we might be in a recession that manages to avoid the official definition. The starting place is the artificial nature of the eight-year long “recovery” since 2009; in the view of many observers, the economy never really exited the 2008-09 recession.

Those in this camp look at fundamentals, not the stock market, which has been held up as a proxy for the real economy, when in fact it is only a proxy for financialization and official selection of the market as the (easily manipulated) signifier of economic vitality and prosperity.

Recessions are supposed to clear the financial deadwood–failed enterprises are liquidated, borrowers who are in default are bankrupted, and bad debt is wiped off the books via the acceptance of losses.

The story of the “recovery” 2009-2017 is that these clear-the-deadwood dynamics were suppressed. Rather than accept painful losses, the authorities saved bankrupt banks and encouraged a Zombie Economy in which zombie borrowers and enterprises are kept alive via low-cost loans and the masking of default via financial trickery: student loans that are non-performing, for example, aren’t labeled “in default;” they’re placed in a zombie category of forgiveness without actual writedowns of the debt.

If households can no longer afford to pay interest on new debt, the “solution” in a Zombie Economy is to offer them 0% loans. If corporations need to roll over debt, the Zombie Economy “solution” is the companies sell near-zero yield bonds to credulous investors.

If households can no longer afford to buy homes, the Zombie Economy “solution” is for federal agencies such as FHA to offer near-zero down payment mortgages and guarantee private lenders against any loss.

When these agencies get into trouble due to the horrendous costs of encouraging uncreditworthy borrowers to take on debt they can’t afford, the “solution” is for the taxpayers to fund yet another $100 billion bail-out.

The stark reality is fulltime jobs, productivity and profits are all subpar. As I have noted many times, wages for the bottom 95% have gone nowhere since 2000 when adjusted for inflation. Households can no longer afford more debt unless it’s at near-zero rates of interest.

Fulltime employment–the bedrock of consumer spending and borrowing–has barely moved in eight years. Part-time waiters can’t afford to buy homes or new vehicles.

Wealth and income can only be generated in the real world by increases in productivity. Unfortunately for the “recovery” narrative, productivity is tanking.

Corporate profits are also going nowhere.

In essence, the “recovery” economy is a zombie economy living on great gulps of new debt that it can’t service. As sales, profits and tax receipts weaken, eventually employment weakens, too, as employers trim costs by cutting positions, hours worked, etc.

Eventually, zombie borrowers give up trying to service unpayable debts, zombie companies close their doors, and the illusion of “growth” collapses in a heap of corrupted numbers and false signifiers.

The “recovery” game will shift to massaging GDP so it ekes out .1% “growth” every quarter until Doomsday. The Zombie Economy can be kept alive indefinitely–look at Japan–but it not a healthy or vibrant or equality-opportunity economy; it is a sick-unto-death economy of fake narratives (growth is permanent) and fake statistics (we’ve revised previous numbers so that, surprise, GDP is still positive.)

If we stop counting zombies, we’re already in recession. 

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  • Shiggity

    Millennials have never known anything besides a complete failure of neoliberal capitalism.

    We’re the ones whose careers started with debt and “you need 3-5 years experience for this opening position or we’ll give you this unpaid position.”

    By the way the cost of healthcare, rent, and higher education are *exploding*, while the infrastructure of the country completely rots away.

    This is all while the baby boomers have been racking up insane amounts of debt and then deciding they’re going to refuse to pay for anything.

    Just for the record, average GDP growth rate in Chicago was LESS THAN THE GREAT DEPRESSION from 2008-present. LESS THAN THE ****GREAT DEPRESSION****.

    Mild recession? Maybe talk to a millennial to see what reality is really like.

    Oh and about the Gig Economy. The gig economy is awesome…IF YOU DON’T WORK IN IT. It’s AWESOME for everyone USING it. Baby boomers turned their own children into slaves and wonder why we’re so bitter, depressed, anxious, frustrated, etc.

    • ZARTAN


      I am x-generation, and I can tell you, this began long ago: it started in the 70s/80s with the Export of the Steel Industry. The Entire Rust Belt was Devastated.The US economy has been degraded into a slave economy. I had $65,000 in SLSC debt for Jobs that I would not wish on my enemies! This is a crime, above, and (Mobsters) Street Criminals would never do such Evil. I should have went to the Mafia for a Student loan.

      Those Criminals Charged me 100-percent Interest Rates! I am not the only one … Why, does everyone Hide the Truth? Then, the housing market exploded because bankers were making idols out of necessities! Nobody did, BOO! Many are suffering because of this wicked economy, and that is why I advocate taking back Wall Street and Pillaging their Profits by Protest. Make them feel the Pain.

      Jobs are Rubbish and are priced by Wall Street ( Corporate mob) to ensure nobody gets “anything” and everyone is dependant upon Credit. Anyone who knows History, knows, the Romans Invented Credit to make Slaves of Citizens. Americans love their Credit ( slave) Score … DEAR GOD!

    • Deborahhmoreno

      my friend’s sister-in-law gets $85 an hour on the internet. she has been unemployed for four months. last month her check was $14416 just working on the internet a few hours a day… ➤check➤ out


    The Entire economy is a lie.

    One only needs to look at the silly manipulation of employment data to know all you need to know about government statistics. Total BS.

    However, what is disturbing is that people go along with this BS; because their man Trump is in office. I am laughing at Drudge Report and “others” trying to paint a Rosy picture now with Trump when they were crying DOOM with Obama a few months ago. Nothing could be more ridiculous. People have lost their minds.

    People have no hope, when they will lie for their imagined leaders, who do not have any loyalty to them. All Hope is Lost. There is no Recovery. Most of the Stimulus “went to export more Jobs” and the Jobs created were part time service sector rubbish. If people were really interested in the economy, then they would insist, that a non-related third party do the statistical analysis. Government Data is a Conflict of Interest.

  • ICFubar

    “The whole world is turning Japanese,” and if we look at Shadow Stats figures unemployment is at 1930s depression levels in the low 20s percentage range. But instead of seeing soup kitchens there is the unseen spectacle of food stamp usage on an unprecedented level. Recession or depression and guaranteed minimum income? If we subtracted the economic stimulus of all forms of welfare, instead of having economy provided jobs, the GDP figures would be negative in a -3 to -4 % range.