"If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it. A recession is inevitable within the next 12 to 18 months".
This one came out of Bloomberg through Bill Dudley. It is actually an opinion type of article, so take it with a grain of salt. There are already quite a few out there, however, claiming that we are already in a recession. Hence opinions seem to be mixed.
But sir, what does a recession really mean?
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending.
source
I was reading today that about 40% of Americans are going to cut driving for holiday. I don't know what a trade flying instead of driving would be, but there are already signs of a contracting economy in the US. We don't seem to spend that much anymore anywhere in the world.
A recession is somehow needed in order to temper high inflation, say the experts, but are we already in a recession? That's the topic of the #askleo post of today.
Well, imo we're not there yet. I don't know if it will be 12-18 months before we enter one, as forecasted by Bloomberg, but there are already signs of economical contraction. I'm seeing that in my own town.
Living in a touristic area and being close to this type of business for a few years I kind of know when the town is in full throttle regarding tourism and when not. 2020 was the best year ever in this regard. I know it sounds odd, but it's true.
Despite being the year of the pandemic we've had tons of tourists in here. The situation we no longer have. It's not like the town is deserted, but it's clear that people are no longer spending that much. Gas and diesel prices have literally gone through the roof and there's no stop to that.
Hence we might be probably a few months away from a recession here. I don't think we are there yet, though. What do you think?
Thanks for your attention,
Adrian