#275: The recession is in the past

Tell me, how do we define a recession? Let me remind you.

We have a recession when the country's gross domestic product, its GDP, shrinks for at least two consecutive quarters. A depression is more severe and lasts longer.

The really important part of this definition always seems to get lost when so-called experts talk about recessions and depressions.

Did you spot it? It is that bit about ‘for at least two quarters’. Why is that significant? Well, it tells you that we never actually know whether we are in a recession or not. You see, a recession is always in the past. Economic data is historic because it takes months to gather.

So how do we know that this quarter is part of the recession? We don’t.

Until you do know, you have two options. Act as if your business is still in a recession or behave as if the recovery has begun. It’s your choice.



I’m JamesMcIntosh@nonsenseatwork.com

Copyright: 2009 James Henry McIntosh

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