79%, to be precise, believe we’re in a recession now. According to the CNN/Opinion Research poll, this is up from 46% six months ago and 2/3rds of respondents back in February.

This is in contradiction with the technical definition of a recession, which is two quarters of negative GDP growth (simplified: the economy shrinks twice in a row). It grew last quarter, but only by 0.6%. Still, that’s growth, and it means we’re in a slowdown, not a recession.

So why does perception beat reality? Is it just a misunderstanding of the definition. No, I think this quote from the CNN piece sums it up pretty well:

“You probably don’t have 79% of economists saying that we are in a recession,” said Jeoff Hall, chief U.S. economist for Thomson Reuters. The country has “lost 260,000 jobs (in the first 4 months of 2008), so for those people it is not a recession, it is a depression.”

It’s about personal impact. And right now, high gas prices, job cuts, and uncertainty are playing their role. Perception can sometimes be stronger than reality. And sometimes, I think we need to change the definition of recession.

Two questions for the readers out there: Do these numbers surprise you? And do you think we should look into how we define a recession? Voice yourself by posting a comment!

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Scanning the headlines was very frustrating today. Why? Because it seems that the media has latched onto a new favorite buzzword:

Recession-Proof

What does that mean, anyway? Well, I assume it’s just like something that’s waterproof: It can “repel” or “keep out” recession. Funny enough, Wikipedia has no article for recession-proof, though they have a horrendous article on “recession-proof” industries.

Let me give you the recent “recession-proof” headlines.

• LA Times: Is Canada Recession-Proof?
• About.com: Is McDonald’s Recession-Proof?
• PC Magazine: Is the Tech Industry Recession-Proof? (catching onto a pattern yet?)
• Forbes: America’s Recession-Proof Cities
• And my personal favorite - LA Times Blog: Strippers Urged to ‘Recession-Proof’ Bodies. (it’s the lecture the clubs give that kills me)

Just do a Google Search if you haven’t had your fill of ridiculous recession-proof headlines.

The truth is that there’s no industry, city, or stripper that’s 100% recession-proof. Yes, some industries tend to fare better than others in hard economic times, but each market downturn is unique and thus which industries are affected changes as well. Industries move in and out of towns, changing the workforce makeup over time.

I can only speculate to the reasons for why the media seems to like this buzz word, but it probably ties in to people’s fear, as it often does. We are fearful of what the economy will do to us and our families and the term recession-proof is in opposition to recession. Fine, I understand. There are things you can do to better succeed in a downturn, yes, but remember:

Nothing guarantees your financial security. No city you move to, no industry you switch to will guarantee it. Recession-proof comes off as a guarantee, which is why it’s misleading.

My advice? Be aware but don’t get drawn into the hype. Do what you love and do with all your heart. Corny, yes, but that’s the best guarantee of success.

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Today’s daily roundup on news involving the economic slump:

• Asian stock markets mostly climbed higher on optimism that the U.S. has dodged a full-blown recession. My issue with this Forbes article, though, is that it’s impossible to pin the rise of every Asian market to one single factor, and then to discard the fall of the Indian market. Modest gains all around, though.
• HR World reports that average salaries are dipping, some as much as $10,000 ($105k to $95k for software design, $95k to $85k for product management, etc). A lot of the blame is on the falling dollar. Of course, the dollar gets weaker with each interest rate cut.
• Morgan Stanley is going to cut 1,500 jobs, or about 5% of the firm. Morgan has fared the subprime morgage crisis better than most firms, but it’s still feeling the pinch. After all, recessions tend to hurt harder and longer in New York than the average state.
• According to 24/7 Wall Street, the credit crunch is delivering some pain to small business. 44% of small businesses used credit cards for part of their financing, and small business loans dropped 18% in the last year. Combined, that spells trouble. High interest rates and defaults of small business, the backbone of the economy, is simply not a good thing.

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While reading the New York Times’s article on the April job loss figures (we only lost 20,000 instead of an expected 80,000), I had to scratch my head. Why? Well, let me show you. Here’s the opening paragraph:

The American economy shed 20,000 jobs in April, the Labor Department said on Friday in a report that many economists took as powerful evidence that the United States is ensnared in a recession.

You’d think that these figures spelled doomsday for the economy. Let’s prep for Armageddon! But then I read the next paragraph:

But the size of the loss was significantly smaller than many analysts predicted, and the unemployment rate nudged down to 5 percent.

Significantly smaller? 5% unemployment? Those don’t sound bad at all!

It seems as if the news media and the blogosphere are split on what’s going to happen next (and the NYT can’t decide what it thinks). Is the market going to recover and avoid outright recession? Or are we going to drop to deeper lows?

Here’s some of the debate I’ve found on the internet about the subject:

• President Bush, in press conference with reporters last Friday, stated that “This economy is going to come on. I’m confident it will.” Of course he’s not going to put down the economy, but Lawrence Kudlow makes a logical case that Bush will have the last laugh and that we will avoid recession.
• The Motley Fool seems to think that that we’re still headed for recession, despite the positive gain in GDP last quarter. It’s just going to take longer and developer more slowly. Interesting question they pose: Does that mean it will take longer to get out of it?
• Surjit Bhalla writes in the Business Standard that the recession talk is hype and that the actions of Fed Chairman Ben Bernanke averted a financial meltdown.
• Small Business Trends believes that inflation, not recession, is the looming economic monster.

There’s a lot to debate, so I ask you: what do you think? What’s next: Recession, economic recovery, or inflation?

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Former Fed Chair Alan Greenspan spoke in a television interview this morning, and he had some interesting comments. From Reuters and Bloomberg:

“We’re in a recession,” Bloomberg news agency reported Greenspan had said in a television interview. “But this is an awfully pale recession at the moment. The declines in employment have not been as big as you’d expect to see.”

The key words of the quote: at the moment. He’s stated before that he believed the U.S. is in a recession, but this quote makes me think he’s not convinced we’re anywhere near being out of the woods. Those three little words are important.

Do you think Greenspan’s a bull or a bear?

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Since we’re new, you may not know that we do a daily roundup on the news and blog talk on the recession. Now you know!

So here’s today’s roundup:

• Prolific investor Warren Buffett says (once again) that the economy is in a recession. Of course, this conflicts with how economists and the Commerce Department define recession. He uses his own definition of recession:
  

  I would define that as a situation where people are doing less well than they were three months, six months or eight months earlier and most businesses find themselves in that position too.

  Not exactly an easy-to-measure definition, but I have little right to criticize Buffett.

• The Christian Science Monitor has a new article on the college job market. Specifically, that the college job market has deteriorated. I find this interesting because it was only two months ago when the USA Today wrote that the entry-level market is still very strong. Oh, and according to the Chicago Tribune, college towns seem to be doing fine.
• Apparently, Bear Stearns nearly collapsed twice. You learn some interesting stuff looking through the regulatory records, it seems.
• Finally, Andrew Carroll of the Washington Post has a wonderful suggestion for what to do with your tax rebate: donate it to our heroic troops.

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Buck the Slump officially launches on May 5th. Things to expect:

• A daily round-up of the talk, news, and blogging around the web on recession related topics
• Analysis
• Information on how to better prepare yourself to succeed during the upcoming recession
• Information on how to help others, because you never know when you will need help.
• Guests posts on a variety of topics related to the economic slump
• Personal stories of people’s hardships and success despite adversity. Learning from the stories of others will help all of us.

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