If it looks like a recession, talks like a recession and acts like a recession, then it's got to be one.
And looking at the state of the economy today, many if not most economists are now using the dreaded "R word" in the present tense.
About the only place we're not hearing "recession" from is official Washington, where the bureaucrats traditionally wait until we've had two consecutive quarters of declining
gross national product before making the official pronouncement.
But as one economist said, "By the time they get around to recognizing that the country's in a recession, we're already two-thirds of the way out of it."
Traditionally, there's a lot of gloom and doom associated with a recession, but, believe it or not, there can be an up side.
If you consider one popular definition of a recession as a time when your neighbor loses his or her job, and a depression as a time when you lose yours, then there's an opportu
nity or two when and if a recession hits.
The greatest opportunity is for those on the "buy" side of the economic cycle. If the economy continues to sour, those who are shopping for anything, ranging from a new car to a refrigerator, will be welcomed into showrooms nationwide.
Traditionally, the auto industry is one of the hardest hit during a recession, as consumers pare discretionary spending. You'll hear the words "rebate" and "zero-percent financing" coming into play more. Consumers can see whether they're in the driv
er's seat by seeing how many days' supply of inventory carmakers have on hand. Usually, they can live with 60 to 65 days, but when there's something like a 100-day supply, read that as "buyer's advantage."
lTC There's a something of a correlation between today's economy and the recession of 1973-1974, when the Organization of Petroleum Exporting Countries increased the price of oil, banks were suffering and real estate wasn't too hot either.
For those with long memories, the sudden surge in oil prices caught Corporate America off guard, and
Detroit's gas guzzlers went begging for buyers.
I vividly recall a colleague paying just $800 for a 2-year-old full-sized V-8 station wagon. The bargain was simple: His neighbor was a traveling salesman whose firm ordered its employees to unload immediately their company cars and buy high-mpg models, no matter what the cost.
My colleague needed a car for basic transportation and wasn't all that concerned that the car got 12 miles per gallon. At $800, it was too much of a bargain to pass up.
1% There's little doubt that a reces
sion hurts any business, but those that have been through more than one often come out of them stronger than the time before.
Perhaps it's because they know that they'll have to work harder for their money, offering extended customer service or using the short-term downturn to build long-term business relationships.
Maybe a business will have to carry a customer an extra 45 days or so before the books are squared. It's not the way you like to do business, but it's far better than doing no business at all.