DEFINING A RECESSION

 A recession is generally defined as two successive quarters which register negative economic growth, as measured by the GDP (gross domestic product).   The GDP tallies up all the sources of business activity and puts out a number indicating how much growth or lack of it has occurred over the last three months.  A negative number indicates that business activity has slowed, sales slack off, orders decline, and ultimately jobs, and salary increases dry up too.  Folks who had jobs and the feeling that all is going good in the world don’t fell that way any longer and it takes a long while to get he engines of the economy going again. 

The news for this second quarter is not good and new definitions of “recession” have been pouring out of DC.  The President and his crowd would rather redefine a problem away than actually do something about it.   For them Afghanistan was “just fine “ and the border is “closed and sealed”.  Thus in the last few days just before the second quarter GDP numbers are about to come out—this Thursday—-the President and his treasury secretary Janet Yellin are hard at work trying to soft soap the expected bad news and redefine the problem away.

But some facts are hard to sweep under the rug like the “irregular immigrants” Biden is spreading around the nation with secret night flights.  

I read in Bloomberg Business Report, July 25, 2022, that Walmart, the world’s largest retail store,  has revealed some troubling news.  Its stock shares have tumbled from $132 per share to $118 dollars per share. This news shocked  the market. But worse it also cut its predicted earnings per share for the year by as much as 13%.  Why?  Because business does not look profitable when you have loads of goods no one is buying  

Walmart has been hit hard because it serves the average shopper. These folks have been hit hard by high inflation—-the surging prices of food and fuel—. These shoppers in the lower economic bracket—have had to cut back on Walmart purchases because “Biden’s inflation” has them in a pickle. They spend a greater percentage of their earnings on food and fuel than people in Biden’s or Pelosi’s income category.   The surging high prices of fuel and food leave them much less to spend on other items.  And this decline in spending has left the retail giant with $60 billion dollars in unsold product.  (Target has hit the skids too and has a backlog of $15 billion dollars of unsold product).

What does this mean?  Recession.  

Both Walmart and Target together with a combined backlog of $75billion dollars of  unsold “stuff’ which they are storing on site and probably are not going to sell are not in the market right now (or in the near future) to order more stuff….are they?  

The result is that the thousands of small companies around the nation that make Walmart’s“stuff”….are not going to get any new orders from Walmart or Target soon.  What will these many companies do?  

They will slow down production, lay off staff, close down units.  and some may close their doors.  That is what a negative GDP means—-a slow down or lack of business activity.

That’s what happens in a recession.   

Thank’s Joe and Janet, but no need for your new definitions of recession and denials and word games—the nation knows already what is coming..hard times.