Thursday, February 07, 2019

Telltale Signs of Recession

I'm seeing lifestyles that are out of stock and no longer available, even in China.
Though every recession is unique, all recessions manifest in similar ways in the real economy. By real economy, I mean the on-the-ground economy we observe with our own eyes, as opposed to the abstract statistical model reflected in official declarations of when recessions begin and end.
One characteristic that never makes it into the abstract statistical representation of recession is the light switch phenomenon: business suddenly dries up, as if someone turned a light switch off. This is especially visible in discretionary purchases, which include everything from smart phones to vehicles to eating out.
Other telltale signs of recession include:
Dead giveaway #1: businesses that seemed established and doing well suddenly close. The customers are surprised, the employees are not; they knew sales were eroding while costs were rising, and the financial situation was becoming increasingly precarious.
Dead giveaway #2: new businesses that would have thrived a few years ago close within a few months. Maybe it was the multitude of competitors, or the high rents; but for whatever combination of factors one attributes the demise to, an enterprise that seemed to have all the ingredients for success fails quickly.
Dead giveaway #3: advertising and marketing / promotion no longer move the needle. Campaigns that reliably increased sales no longer work.
Dead giveaway #4: Matriarchs and patriarchs of established enterprises retire. They typically offer rote explanations for their abrupt retirement--to spend time with the family, to enjoy the leisure they never had working 12-hour days, and so on--but the unspoken reason is their decades of experience have finely tuned their recession detectors. They know when it's about to become impossible to grow revenues and they no longer have the need or energy to buckle down and survive the decline phase of their enterprise's S-Curve.
Dead giveaway #5: a cliffdive in new business and new customers / clients. If 3 or 4 new customers would sign up every day in the good old days, suddenly nobody's signing up, regardless of the promotions offered. Then existing customers start drifting away. If you ask why, you get routine answers: family budget cuts, time constraints, etc. Interestingly, these didn't have any impact in good times, and yet suddenly they're like a virulent virus: everybody's got budget cuts and time constraints.
Dead giveaway #6: promotions increasingly give off the pungent scent of desperation. That airline credit card that once offered 25,000 free miles once you spend $1,000 are now offering 50,000 miles on the first use of the card, even if it's for a cup of coffee at Starbucks. Then the offer edges up to 60,000 miles for customers on the airline's flights, and so on.
New renters that were previously offered some throwaway promo (once month "free" gym membership, etc.) are suddenly being offered a free month's rent to sign the lease.
Dead giveaway #7: multiple offers for homes vanish like mist in Death Valley in July. Real estate and home remodels / additions are the most sensitive canaries in the coal mine; they keel over at the first whiff of declining asset valuations and the first hint that greed has flipped polarity to fear.
Dead giveaway #8: the "fun" third vehicles and the inherited sports cars start showing up on CraigsList and "for sale by owner" lots. One of my favorite memories of the 2008-09 meltdown / recession was reporting on all the used Porsches I saw on the local "sell by owner" lot. One of my longtime correspondents said that if he saw me toodling around in a 911, he was canceling his financial support of my work. (Surrender my 1998 Civic for a sports car? Perish the thought--though it was a tempting fantasy....)
Needless to say, I didn't pick up a heavily discounted recent-vintage Porsche, though the prices were amazingly attractive. (Recall my innate frugality.)
Bonus dead giveaway #9: the IPO of the tech unicorn that was sure to be a roaring success is suddenly cancelled.
You undoubtedly have your own dead giveaways that the cycle has turned from expansion and greed to contraction and fear. I'm seeing plenty of dead giveaways the economy is already in recession--what are you seeing?
I'm seeing lifestyles that are out of stock and no longer available, even in China:
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Ajay G. ($50), for your stupendously generous contribution to this site -- I am greatly honored by your steadfast support and readership.
Thank you, John S. ($50), for your superlatively generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:

Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative)
If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.

Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted
on my site.

  © Blogger templates Newspaper III by 2008

Back to TOP