Where's the Recession?

Clients and community members frequently ask whether the economy is currently in recession or if one is imminent.

The Recession Question

Wall Street and Main Street have spent nearly a year forecasting recession scenarios. While predictions focus on soft landings, hard landings, and timing, the fundamental question deserves attention: Is the recession already here?

By the traditional definition—two consecutive quarters of negative GDP growth—the answer is currently no. However, a different economic pattern may be unfolding.

Rolling Recession Concept

Economists describe an alternative scenario: a "rolling recession," where "the recession is felt in pockets at a time." Rather than categorical economic contraction, different industries experience sequential downturns. The overall economy avoids official recession status while experiencing prolonged sectoral decline.

Ed Yardeni coined this term in the mid-1980s and revisited it during recent economic commentary.

Sector-by-Sector Impact

The economic contraction pattern has progressed through several industries: Housing initially declined, followed by Manufacturing and Materials. Technology firms subsequently struggled, with Banks and Finance sectors facing recent pressures.

Consumer Discretionary and Service sectors represent likely next targets as rising interest rates amplify economic contraction.

Preparation Strategy

Without obvious recession indicators, prolonged economic uncertainty demands flexibility. Businesses and individuals should ensure their finances withstand extended economic waves.