As I’m writing this (March 2022), there’s a lot of conversation around whether we are headed for a recession or not.
Since we haven’t had a real one for a while, let’s look at the definition of a recession:
“A significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Most people look at real GDP (adjusted for inflation) to determine whether we’re in a recession. It makes sense in hindsight, but I don’t find that a useful measure to detect a recession. GDP is simply the market value of all the goods and services produced in a specific time period by countries.
It says very little about what you and I feel like when we’re managing our finances and spending.