February 12, 2023 | Is the U.S. in a Recession or Not?

Only on Wall Street is fake news celebrated with such shameless hubris as we’ve seen lately. In the last few weeks, flouting a torrent of lousy corporate earnings reports, investors have gorged themselves on stocks.  This resurgence, doomed by recession and a grim outlook for earnings, was supported mainly by fake, or at least meaningless, employment data showing strong payroll growth. Never mind that most of the newly re-employed were waitresses, shoe store clerks and cruise-ship saxophonists who got laid off during the pandemic. Now they’ll be able to pay the rent again with their own money rather than with yours — a modest gain that economists, Biden and his remaining handful of hard-core supporters would herald as evidence of boom times. Let’s not dwell in the meantime on the fact that high-paying tech jobs have been shrinking at a disturbing rate — by 32,000 in just the last month.

None of this was even faintly on Biden’s mind, such as it is, when he served up a State of the Union address last week telling us why it is once again Morning in America. In reality, U.S. data alleging 3% GDP growth in the last two quarters conflicts sharply with widespread perceptions that the economy remains mired in a recession begun early last year. The eggheads are so deeply in denial about this that they have returned to laughable speculation about whether America can ‘avoid’ recession.

Signs of Decline

But no matter how many jobs are added, and however inflated the stock market and real estate become, the things that determine our standard of living will continue to erode or disappear, just as they’ve been doing since the 1970s. Who doubts, for one, that the day is coming when the last department store closes its doors, leaving us to do most of our shopping either at discount warehouses or on Amazon? While the price may be right, the decline in services and amenities in the retail sector parallels the appalling transformation of air travel from a pleasurable experience into an ordeal. And we all know the sad story of customer support, whether in stores or on the phone: it barely exists any longer. How many years must ‘unusually high call volume’ persist before a company augments its support staff?  Answer: You already know the answer.

There are unfortunately some far more significant instances of decline in the standard of living, chief among them the necessity of two-income households. This was sold as a victory for feminism, but the very steep price we have paid is two generations of children who got short-changed on parenting, Even with the tragic sacrifice this implies, millions of Americans still have to hock their homes just to put their kids through college. Digital wizardry, consumer gizmos, exotic vacation packages, luxury-car leases and computer-designed golf clubs that can add 30 yards to a duffer’s drive may have distracted us from the good life’s disappearance, but there is no hiding it.

Fare Thee Well, Zappos

Amazon rubbed our faces in it last week with layoffs at its Zappos subsidiary. The online shoe discounter was among the most customer-friendly retailers online or off, and its founder, the late Tony Hsieh, was obsessed with providing a high level of customer service that has all but vanished. Amazon laid off more than 300 Zappos employees — about 20% of the Las Vegas-based company’s workforce — charting a path for Zappos that will likely end conversations between customers and human support.

Are we in a recession? Call it whatever you want, but the economy is in a bad way, powered by consumer borrowing that is unsustainable and shakily backstopped by Baby Boomer ‘wealth’ dwarfed by Social Security, Medicare and public pension liabilities that continue to pile up beyond measurement.

Rick Ackerman February 12th, 2023

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