Recession Fears and Us

Chris Isidore has written an interesting article about the US economy at CNNMONEY.com.* He quotes several prominent economists who claim that a recession has already arrived:

"Alarm bells were set off Tuesday by a grim report on service businesses, which make up the majority of the U.S. economy. The Institute of Supply Management said that activity in the service sector declined for the first time in nearly five years. This report also indicated that employers are cutting staff. The survey covers the retail, transportation and health care industries as well as hard hit areas such as finance, real estate and construction.... Economist Bob Brusca of FAO Economics said he doubted that the U.S. was in recession a week ago, but now he believes there's about a 75% chance that a recession began in January. 'That's what recessions do. They come upon you all of a sudden," he said. "When you look back at history, you're struck by how even-keel it is until the bottom just falls out.'"

I know that many people have been dreading the economic fate of our country, what with the terrible drop in housing. But this article seems to indicate that the hit is being felt in the business sector. Aside from when our housing values will climb back, consumers must be wondering how long this set of bad news will play out:

"Federal Reserve Bank of Richmond President Jeffrey Lacker, who is known primarily for being more concerned about inflation than economic growth, said in a speech Tuesday that 'the prominence of downside risks means that further easing ultimately may be warranted.' Lacker does not get to vote on monetary policy decisions this year, however. Lacker added that 'sluggish growth in the near term' -- not an actual recession -- is the most likely economic scenario. But he did not completely rule out the possibility of a 'mild recession, similar to the last two we have experienced.'"

It comes as no surprise that the most sense we tend to have about the economy as consumers is almost entirely based on our own personal expenditures. The question becomes how much of this economic downturn is truly felt by everyday people. One would find it difficult to separate business cycles from our own true economics when it seems that our pocketbooks reflect the surging cost of energy and insurance, which we don't always (or rarely) see reflected in scientific economic reports. Frankly, some data on those realities could place this current economic cycle into a realizable context for consumers.
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Source: [*] CNNMONEY.com [Chris Isidore].