Recession Warning Signs
It seems that analysts were shocked again today. They found yet another indicator that a recession is underway in spite of claiming, “Recession? What Recession?”. Those of us in the trenches of business know we’re at the cusp of one, don’t we?
This time the source was a leaked report from the Institute for Supply Management. Their non-manufacturing index fell to 41.9 in January. This is a tremendous drop from the December reading of 54.4. This is the lowest this indicator has been since October 2001, just after the 9/11 attacks. Wishful thinking economists were anticipating a small drop of around 53.
This index is based on the growth or contraction of service sector industries. The service sector contributes around 90% of the economy of the United States. When this reading is below 50 this indicates that there is a contraction in this sector. Given that it is now 8 points under this does not bode well for the future.
The Road to Recession
The indication is that the recession we’re entering now will be at least as bad as the 2001-2002 recession. However, given the convergence between contraction and the loan crisis and the oil crisis and the ongoing war on terror I think it will be a much more severe recession.
When I have spoken to some of my clients they all express great concern for the future of their small businesses. Many of them are looking into cutting their staff this month, some by as much as 25%.
The road to Recession has begun. I’m afraid that I have been terribly accurate in this area. This new report along with a recent government jobs report indicates that we are most certainly within the hoary grasps of a Severe Recession.
It is almost as if what I’ve written was a long forgotten lore. Nobody seemed to expect a recession, particularly not a severe one. No one had requested that I should talk about Surviving a Recession. It just sort of happened as I watched it start and go into high gear in January.
Don’t Forget These Recession Facts
You should examine these 3 Recession Facts:
- Recessions are a sad and deeply confused time for many people
- With a little calm thought you can find ways to survive the recession
- It will get a lot worse before it gets any better
You should concentrate on this. There isn’t too much hype about Recession, there is too little. This can be argued, but this is the most important idea. Some people, particularly economists and business journalists, have a lot to learn about Recession.