How do you know if the U.S. economy is in recession? Oh that’s easy you say, “it’s when my neighbor loses his job”. We’ve all heard that one, and then when we lose our own job well that’s known as a depression. But are there other signs, hints that recession has arrived or has still [yet] to arrive? You would be surprised to know I believe there are some great signals that can be found at the local level that don’t require an advanced degree or calling on an expert to detect an indication of. Most of these are just simple recipes that flash signals indicating the overall health or ill-health of the U.S. economy. So no rocket science here, more akin to home remedies, like “take two aspirin and call me in the morning”, that kind of a thing but still these tend to be very accurate. Here are a few examples:

Back in 2008-2009 things got pretty ugly, so ugly that a ton of skilled workers were displaced via massive layoffs occurring nationwide. There just wasn’t any work to be found especially for those with trade skills, such as electrician or plumber. Those that didn’t have their own practice but were employees of builders, many found themselves out of work due to the Great Recession of 2008. I remember I was planning a project to move light switches and piggyback off another receptable in the wall then run wiring inside a wall to install a new toggle switch just above a bookshelf I had built. I needed some expertise on how to wire all of it without killing myself or burning the house down. I walked into a Home Depot and headed to the electrical aisle when they directed someone over, he was a licensed electrician who had lost his job and to make ends meet he was now working for Home Depot, [most likely for a lot less]. We ended up talking for awhile. He mapped out my entire plan for me on paper with just what to do and what not to do. I went home and following his instructions completed my electrical re-wiring and installation project successfully. Try this today, walk into a Home Depot looking for a licensed electrician, or plumber, etc. for “how to” advice and see what you get. You’ll find a kid that never worked in the trade and holds no professional license(s). This is one great signal for whether or not the economy is in recession. So this test is a “fail” at this writing anyway. The key is that during a recession all kinds of qualified people will be displaced and eventually end up in jobs, or even multiple part-time jobs that they are clearly over-qualified for. It happens in every downturn.

Once in a while I go through the McDonald’s drive-thru for a sausage and biscuit sandwich like this morning, or head over to Whataburger to lunch on a you guessed it – a “what-a-burger” of course! 🙂 In all these fast food places I still find myself being served by people with very broken English, people that for the most part were not born here. During severe downturns instead you’ll find white people who clearly articulate the language, people born here but now working at fast-food chains or a Starbucks pouring coffee when once upon a time they were consultants or middle managers. For them now it’s about making the overhead and just surviving. Some of these displaced folks may even possess technical degrees. That’s not happening yet [anyway], so again I would have to say that evidence we’re in a real recession, or a deep downturn has yet to surface at this writing.

Lastly, one of my best recession indicators, is to look at the U.S. stock market. The best example is a broad market index. I use the S&P 500 index for this indicator. Look at what is happening now, basically 7 companies are responsible for all the recovery returns in the S&P 500 index year-to-date. These companies are in the technology sector and they are making up at least 30% or more of the returns in an index that holds 500 companies. See any problem here? This isn’t sustainable. Re-1999 when literally two companies made up the total return in the S&P 500 Index that year, Microsoft and Boeing. What happened next? It wasn’t good, the stock market fell hard in March of 2000 and rocked around. It would be 2-1/2 years until the U.S. stock market would finally bottom, the month was June of 2022. Both the bond market and the stock market have been signaling trouble for awhile so I would have to say this indicator is in play for recession.

Here’s a simple timeline for you, just another street indicator [if you will] of living in a recession in the United States –
King Crab lovers will switch to salmon and those who normally buy steak will be switching to hamburger. While hamburger folks move down to Salami, the Salami folks will hunker down into a bologna sandwich, then you’ll find the Bologna sandwich folks re-size down to peanut butter and jelly… see where this is going?

Even though there are several mixed signals this economy is giving off in my humble opinion the U.S. economy is holding up for now but not out of the woods here, not by any means. The labor market continues to place dollars in the hands of consumers but is it sustainable? As long as very incompetent people are leading the country we are in danger of a more major downturn in activity than we’ve witnessed since early 2021. Or worse, some new exogenous event could be the final straw, could be what it will take to greatly disrupt business activity. It’s too early to tell for sure but our enemies always smell weakness. If you want to circumvent having to eat bologna sandwiches then get back to the polls, make great decisions this time for the country because when you make great decisions on who should run our country, you’re also making great decisions for your own circumstance and that of your families circumstances. 😉