Are we headed into another recession in 2013?

Categories: News

What is a recession?

Technically a recession occurs when business cycles retract, evidenced by down consecutive quarters of GDP, or a 12 month 1.5% or more rise in unemployment.

When did the recession end?

The most recent recession officially started December 2007 and ended June of 2009.

Did the US recession really end yet, what about a global recession?

The affects of that recession are still being felt, because it impacted so many people, and it is taking them a lot longer to get on their feet. Within the past year some European countries experienced recession, or a double dip recession. When you consider that we really have a global economy, you could say we are in reality in 4 year global recession that started in 2008.

Are we headed for another recession in 2013?

This concerns economists and watchers like myself, when we look at several months of stagnating employment numbers, decreasing GDP and manufacturing output:

  • The Official Unemployment rate that tracks only those who are without jobs and have actively sought work within the past 4 weeks, shows stagnating numbers, although we are far from the peak of 10.10% we saw in October 2010, for 2012 it has varied in the range of 8.10% – 8.30%, so we are not seeing a lot of improvement.
  • Initial Jobless Claims for Unemployment Insurance is another number to watch to see trends. We are far away from the bad days of 2009 when it peaked at over 650,000 for the average claims for unemployment benefits. In 2011 the claims were in the low to mid 400,000′s, and since October of 2011 they have been below 400,000. This number is important to keep an eye on, because it indicates how many people who got laid off and are seeking benefits. This year we aren’t getting any worse or better, just stagnating a little under 400,000
  • Manufacturing output is a good indication of how industry is doing, and was modestly increasing this past winter, leading to some guarded optimism, but for almost the last 6 months it has decreased to Spring 2009 levels.
  • Gross Domestic Product (GDP) tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison to the previous quarter. GDP growth was at 4.1% about 9 months ago, this year slumping to 2% in the first quarter, and 1.3% for the second quarter of 2012.
In conclusion:

These things, and other factors seem to indicate to me that it is quite possible we are heading into another recession in 2013. Are there any optimistic economic indicators? Housing seems to rebounding and could provide some of the seed for a recovery. Home values in some areas are increasing and new construction is on the rise, if this increases at a high rate, it might help fuel a recovery. Lastly, some people may believe a presidential candidate offers compelling story for an economic turnaround. However at the end of the day, we have some control over our personal economy (our careers and finances), and all we can really focus on is working hard and managing life well.