Are We Already In Recession?

Tyler Durden's picture

Authored by Charles Hugh Smith via OfTwoMinds blog,

If we stop counting zombies, we're already in recession.

How shocked would you be if it was announced that the U.S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters?

Would you really be surprised to discover that the eight-year long "recovery," the weakest on record, had finally rolled over into recession?

Anyone with even a passing acquaintance with the statistical pulse of the real-world economy knows the numbers are softening.

-- Auto/light truck sales: either down or off a cliff, depending on how much lipstick has been applied to the pig.

-- Restaurant/dining sales: down.

-- Tax receipts: down.

-- Retail sales: flat, stagnant or down, depending on the sector and if the numbers have been adjusted for inflation/loss of purchasing power.

-- Rents in high-rent regions: finally softening after years of relentless increases.

-- Consumer debt: hitting new highs.

-- Corporate profits: stripped of gimmickry, stagnant or down.

Those who study recessions know that employment often tops out just before the economy rolls over into recession. Strong employment is the last gasp of an expansionary phase.

There are several fundamental reasons why we might be in a recession that manages to avoid the official definition. The starting place is the artificial nature of the eight-year long "recovery" since 2009; in the view of many observers, the economy never really exited the 2008-09 recession.

Those in this camp look at fundamentals, not the stock market, which has been held up as a proxy for the real economy, when in fact it is only a proxy for financialization and official selection of the market as the (easily manipulated) signifier of economic vitality and prosperity.

Recessions are supposed to clear the financial deadwood--failed enterprises are liquidated, borrowers who are in default are bankrupted, and bad debt is wiped off the books via the acceptance of losses.

The story of the "recovery" 2009-2017 is that these clear-the-deadwood dynamics were suppressed. Rather than accept painful losses, the authorities saved bankrupt banks and encouraged a Zombie Economy in which zombie borrowers and enterprises are kept alive via low-cost loans and the masking of default via financial trickery: student loans that are non-performing, for example, aren't labeled "in default;" they're placed in a zombie category of forgiveness without actual writedowns of the debt.

If households can no longer afford to pay interest on new debt, the "solution" in a Zombie Economy is to offer them 0% loans. If corporations need to roll over debt, the Zombie Economy "solution" is the companies sell near-zero yield bonds to credulous investors.

If households can no longer afford to buy homes, the the Zombie Economy "solution" is for federal agencies such as FHA to offer near-zero down payment mortgages and guarantee private lenders against any loss.

When these agencies get into trouble due to the horrendous costs of encouraging uncreditworthy borrowers to take on debt that can't afford, the "solution" is for the taxpayers to fund yet another $100 billion bail-out.

The stark reality is fulltime jobs, productivity and profits are all subpar. As I have noted many times, wages for the bottom 95% have gone nowhere since 2000 when adjusted for inflation. Households can no longer afford more debt unless it's at near-zero rates of interest.

Fulltime employment--the bedrock of consumer spending and borrowing--has barely moved in eight years. Part-time waiters can't afford to buy homes or new vehicles.

Wealth and income can only be generated in the real world by increases in productivity. Unfortunately for the "recovery" narrative, productivity is tanking.

Corporate profits are also going nowhere.

In essence, the "recovery" economy is a zombie economy living on great gulps of new debt that it can't service. As sales, profits and tax receipts weaken, eventually employment weakens, too, as employers trim costs by cutting positions, hours worked, etc.

Eventually, zombie borrowers give up trying to service unpayable debts, zombie companies close their doors, and the illusion of "growth" collapses in a heap of corrupted numbers and false signifiers.

The "recovery" game will shift to massaging GDP so it ekes out .1% "growth" every quarter until Doomsday. The Zombie Economy can be kept alive indefinitely--look at Japan--but it not a healthy or vibrant or equality-opportunity economy; it is a sick-unto-death economy of fake narratives (growth is permanent) and fake statistics (we've revised previous numbers so that, surprise, GDP is still positive.)

If we stop counting zombies, we're already in recession.

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Son of Captain Nemo's picture

Question: "Are We Already In Recession?"...

Answer: Does it even matter what you call what we're in at this point!!!

crghill's picture

I signed in just to upvote that comment!!!!!

The Cooler King's picture

We need to count the zombies because they're the most productive ones.

GUS100CORRINA's picture


In essence, the "recovery" economy is a zombie economy living on great gulps of new debt that it can't service. As sales, profits and tax receipts weaken, eventually employment weakens, too, as employers trim costs by cutting positions, hours worked, etc.

DEBT is like an anchor preventing GROWTH of any kind. Until we deal HONESTLY with the DEBT challenge, this thing called the economy is not going anythere anytime soon. Any robust, sound solution in dealing with the DEBT issues will take time.


Give Me Some Truth's picture

Well, the data that determines if an economy is in a "recession" is controlled by the government. There are no investigative journalists who fact check any of this data. It's just accepted as the truth.

So, we will NEVER have a recession if the people producing bogus stats continue to produce bogus stats. And why wouldn't they? 

Do "they" have an incentive/motive to make us think we are not in a recession or even depression?

Another question some have had the temerity to ask: Would our own government lie to us? And would the MSM print lies?

Could all of the below actually be the case?

- Unemployment figures - bogus.

- Inflation figures - calculations constantly changed to produce bogus results

- GDP figure - bogus

- Interest rates - kept artificially low by Fed?

- Stock and bond markets aritifically inflated by daily or recurring interventions ? (Does such behavior qualify as a "free market?"

- Prices of monetary metals suppressed to protect positive sentiment for the US fiat dollar?


Caloot's picture

More like a vampire economy.

Ghost of PartysOver's picture

Nope.  Not when the Empire is crumbling.  Which, btw, is bullish in a sick, twisted kind of way.

Give Me Some Truth's picture

I always check the gold and silver prices. This morning they are down with the threat of war in Korea and Venezuela UP. As far as I can tell, no progress in alleviating the debt ceiling "crisis" or passing any kind of budget for the U.S. government. Cold War with Russia. Cold War with China. Frosty relations with Europe. U.S. states on verge of defaulting. Retail apocalypse. Restaurants struggling. Car sales in the pits (even with existence of zero percent financing and 80-month loans). 

There is NO WAY history's "safe haven" assets should be declining with all of the above happening. To me, it's brazen proof these markets are rigged. And then you have the obvious fact that regulators and the MSM have no interest in exposing or investigating this possibility. This tells me that EVERYONE who matters has gone "all in" on preserving a status quo that is a lie and fraud.

Everyone - who matters anyway - seems to have a massive and/or selfish incentive to continue kicking the can and preserving the status quo for as long as possible. This status quo depends on the U.S. Printing Press Operating in the same manner it has for years, or decades. Anyway, the Printing Press Must Be Protected. And will be (so economic stats will be fabricated, the stock market will continue to rise, gold and silver will not be allowed to rise to any noticeable degree, etc.)

canisdirus's picture

There is a more practical reason that "safe haven" assets are declining: You can't eat them, you can't drink them, they don't provide shelter, they don't provide transportation, and they don't provide heating/cooling. When 98+% of the population is hanging on by a thread, there isn't much left over to bid up the price of something that doesn't provide critical life needs. Most people have been pushed into a situation where just surviving today is about as much preparation for the future as they can handle.

Remember that were in a recession for 7 years before we went into a depression for the last 10 years. Basically, in spite of all the fake numbers, we've had a solid 17 years of declines in the economy. If people wonder why we have violence and an opioid epedemic, it can all be summed up in this leaving about a third of the adult population without meaningful employment.

Give Me Some Truth's picture

I agree with the bulk of your post, including the mention that purchases of gold and silver probably come second to paying the rent or putting food on the table. 

Still, the people who could move the price of precious metals are people who do have disposable income. They just now choose not to spend such income on investment/insurance assets like gold and silver. The "sentiment" for gold and silver has been beaten down repeatedly and brutally for years. This has had a massive effect on the pschology of those who might have bought gold and silver as wealth protection.

Any significant price move in the monetary metals would have to come from big money investors or funds or banks or central banks. These people are interested in protecting sentiment for fiat paper currencies that governments print, not historic real money that must be mined from the ground. The latter is competition for the former. Competition that the Establishment would prefer disappears. 

canisdirus's picture

I'm not as invested in the conspiracy theories surrounding it. There is simply no reason to buy it when every other asset class is exploding in value.

The thing that baffles me about PMs is this: Platinum is distinctly rarer than gold, has heavy continuous industrial demand, yet it is quite volatile and currently less than gold. Gold also has industrial demand that is fairly constant. If anything, based on these two, either platinum is severely undervalued or gold is extremely overvalued.

I also doubt the usefulness of gold in a societal breakdown scenario that people seem to believe it protects them against. Gold is simply far too valuable to use for trade. If it's depressed now, imagine where it will be when there is no food on the shelves of any store in this country...

Bladerunner44's picture

Two broke, staving people walk into a restaurant and order the most expensive food on the menu . As they eat heartily and without regard, one of the profligate glutons says to the other, but we have no money how are we going pay for this. The other says we'll worry about that when our bellies are full. And so you have our parable for today.    

Thugocracy's picture

Google Keynes' definition of depression. We've been in one for ten years.

Give Me Some Truth's picture

Yes, it dang sure matters if we call it a "recession" or not.

The "economy is fine and dandy, no worries, mate" meme is vital to continuing with the Status Quo. 

"Recession" equals "all is NOT well." This might make more people "panic" and maybe, for example, start loading up on "safe haven assets" like gold and silver. And lose faith and confidence in the fiat dollar. One negative cascades into another, at least potentially. Before you know it, the entire game might be over. 

If "they" can continue with the "economy is fine" or even "okay" narrative, they will. And they can do this because they control the economic reports that tell us if we are in a recession or not.

I get your point. The label "recession" would not matter if people were alert and knew what was really happening. But they are not and they don't. All the "man on the street" and the MSM care about is: 

A) Is the stock market climbing?

B) Is the economy growing (i.e. are we avoiding a recession)?

That is, the perception is all that matters. And who controls the creation of this perception? You might say that this perception is the ONLY THING that matters.

FreeShitter's picture

Been in one since Dot com.

The Real Tony's picture

The stock market too is in a long term bear market dating back to the Dot-com crash.

canisdirus's picture

Seriously. We never actually recovered from that.

BandGap's picture

Never had a problem finding work until 2009.

When CEOs go to Wall Street and the street tells them to cut heads to jack up profits (in essence not giving a shit about future growth) they do so.

canisdirus's picture

Most of tech was in an outright collapse/depression outside of a few coastal cities from mid-2000 to 2005-2007 (depending on the region). I had some difficulty in 2013, but not severe. The current conditions are ridiculous - everyone wants a purple squirrel/unicorn for a position that really can't be filled (these people do not exist). They've had jobs merged for so long due to this mentality that it has fragmented the market to the point that nobody has the right mix of skills for anywhere that isn't huge or working in a very specific common stack. The core 20% of the list might be a slam-dunk, but they also want a laundry list of unrelated skills and familiarity with unique tools in their environment because they're replacing someone that filled every gap that was created as they cut headcount. The fact is that they need 3-4 people to fill it, just as my current employer will quickly learn that they need at least 6-8 people to replace what I do.

It's all a result of this exact short-term head-cutting mentality. People that are good have picked up the slack, but the moment they move on the operation of the company will fall apart.

hooligan2009's picture


america gets to choose an economy baed on enitlements tht taxes the productive sectr to death or one based on doing business and getting rewaded for ambition and effort.

tough choice for libtard socialists - do nothing and get paid entitlements or get a job and work hard for the same money.

being useful to the wider community is common sense for everyone that is NOT a libard socialist.

central banks are politically motivated to reward profligate borrowers (libtard socialists) with low interest rates - all qe is sponsored libtard socialism and smoothing the decline into (japan like) a zombie economy.

the only time qe has worked in history has been government sponsored qe - like the marshall plan - to rebuild bomb cratered countries. we are now seeing gthe inverse, where qe turns economies into bomb craters of despair.

Memedada's picture

It is not a recession. It is a robbery. And it is your capitalist masters that are robbing you (again).

The privately owned banking cartel is robbing the public by expanding the money/fiat supply. Everyone who does not own a bank (the 99,9%) gets indebted to the ownership class either directly by getting in debt themselves or indirectly by the public getting into debt (via the also privately owned central bank).

The only ones sure to be richer are the ownership class.

And only in US are some of the plebs (like you) convinced this financialized economy privately owned and controlled by a tiny cadre has anything to do with “communism/socialism”. Socialism and communism has one central (and only important) defining aspect: the social, common and/or public ownership of the means of production. Everything (important) in the world today is privately owned. We live in a capitalist economic system. And no, free markets are not defining of capitalism. You can have free markets of social, common or public owned entreprises.

The reason to keep the US plebs in the dark on ideologies (and how to name the current illness) is obvious.

Thugocracy's picture

Progressives gave us the Fed and just printed themselves a few trillion dollars with the promise that it would trickle down to us. So it's somebody else's fault that the Fed is a disastrous construct. Hmmm, not seeing it.

Central Bank leads to inflation and war. Progressives gave us the Fed. Ergo, Progressives gave us inflation and war. We went from border clashes to going abroad in search of dragons to slay as soon as the first Progressive president took office. It enlarged and engorged as soon as Progressive presidents had the Fed to back them up. The capitalists are a step behind, not a step before.

Thugocracy's picture

Progressives gave us the Fed and just printed themselves a few trillion dollars with the promise that it would trickle down to us. So it's somebody else's fault that the Fed is a disastrous construct. Hmmm, not seeing it.

Central Bank leads to inflation and war. Progressives gave us the Fed. Ergo, Progressives gave us inflation and war. We went from border clashes to going abroad in search of dragons to slay as soon as the first Progressive president took office. It enlarged and engorged as soon as Progressive presidents had the Fed to back them up. The capitalists are a step behind, not a step before.

Thugocracy's picture

Progressives gave us the Fed and just printed themselves a few trillion dollars with the promise that it would trickle down to us. So it's somebody else's fault that the Fed is a disastrous construct. Hmmm, not seeing it.

Central Bank leads to inflation and war. Progressives gave us the Fed. Ergo, Progressives gave us inflation and war. We went from border clashes to going abroad in search of dragons to slay as soon as the first Progressive president took office. It enlarged and engorged as soon as Progressive presidents had the Fed to back them up. The capitalists are a step behind, not a step before.

two hoots's picture

We?  It only matters what financial situation you are in at any point in time.   Not much you can do about the other.

two hoots's picture

Oooooops, it wasn't worth repeating.

jamesmmu's picture
The next financial crisis will be “beyond the capacity of central banks to cure.” Gold has never looked better.

CRM114's picture

Been in recession since 2009.

Consider all the above data relative to real inflation (e.g. shadowstats), and the fact that most "full time" jobs are anything but in reality (30 hours a week over 10+ shifts is considered full time by the stats wonks), and there has been no recovery at all.

It's just now so bad that they can't even hide it any more.

lester1's picture

If inflation was ever calculated correctly we never got out of the 2008 recession and are actually in a depression! That's a big reason why Trump won the election. People are sick and tired of being lied to by the government and elitist liberal media.

Notice we still have 43 million Americans on food stamps since 2009 and that number has not gone back down ??

Give Me Some Truth's picture

Right, food stamp enrollment and MediCade are going up ... which would of course not be happening if the economy was really doing fine.

But, some states are kicking people off Food stamp rolls. This is a cost-saving measure and politicians must have concluded that food stamp recipients are not a voting block that can kick them out of office. Also, though I think the Powers that Be know that if the Food Stamp rolls continue to grow someone might actually question the "all is well with the economy" story. 

Given that a growing percentage of grocery store business is food stamp recipients, any effort to seriously cut back on this program is not going to be well-received by the Wal-Marts and Publix of the world. 

buzzsaw99's picture

The Zombie Economy can be kept alive indefinitely...

^^^THIS^^^ is the fact that doom porn writers around here miss every single day.

Putrid_Scum's picture

This is not true.

The mistake the Doomers made was they assumed the collapse would happen, but were never able to articulate, exactly, how The Reset would happen at the operational level.

I only bought Gold in Febuary this year, because now the Reset can happen. Two causal paths have been mapped out that can trigger The Reset. One is unfolding as we speak. It's that or War.

Good Luck Brother

buzzsaw99's picture

most of the sky is falling types who get published on here expect either an imminent stock market crash or a bond market crash or both.  many of the commenters are more cynical and know that the real damage will happen to the usd.  while the latter are correct i fear they too are early and will get whipsawed if they aren't willing to hold a position with a long enough time frame.

Putrid_Scum's picture

I have information flows from Capitalists in the East (China) and the West. 

You may want to PM me, the Chinese are not backing down, so this looks to be it.

Events are unfolding exactly as I was told they would in April.

God help us,



Give Me Some Truth's picture

Re: The Chinese are not backing down...

Well, they went along with the harsh sanctions on North Korea. They haven't played the "gold card" or dumped any U.S. bonds in large measure yet.

I think China might redefine the term "patience." If they have been playing a long game, they will continue playing it. If America is perceived as an adversary, it will be a much weaker adversary in 10 years, 20 years..  


Give Me Some Truth's picture

The people and organizations who are "propping up" the system and creating the metrics that "all is well" with the economy apparently have more power to do this than they have ever had before. There are no "free markets' anymore. Regulators who would challenge the Status Quo simply do not exist. In the entire nation, zero journalists (at least in the MSM) are working full-time trying to expose any of the really big lies.

There is no reason for the riggers and liars and corrupt to cease and desist. If anything they have become more emboldened or brazen in their fraud-perpetuating activities. Absolute Power does corrupt absolutely.

I think a lot of us expecting a collapse of the system simply underestimated the extent and scale of the corruption. Our "predictions" were based on expectations that assumed levels of integrity and fairness and rule of law that apparently have vanished. I know this, all these entitities have a strong incentive or motive to continue with the Status Quo.

One day, some black swan will break through. The laws of Adam Smith will prevail.  Truth will prevail over lies. Karma will play a hand. But I think I'm done making predictions of when that day will be. It might be tomorrow. it might be 20 years from now. 


bshirley1968's picture

Sorry Charlie, you can't use old world, reality language to describe what is going on today.

If we strip away the zombie corps that have been living off gov subsidy, gov regulations that force payment, and free worthless printed fiat from the fed, we would realuze that this has been a communist/socialist/welfare economy for the last 50 least.

The game has been rigged for decades.......and it's time to pay the piper.  Let's get it on!

buzzsaw99's picture

the piper will not be paid.  that's why he came back for the chilruns.

BadSpybot's picture

Once they start taxing industrial robots and factoring in their productivity, all those productivity and GDP numbers will be pushing the top of the graph.  See how easy it is to be a government economist?

buzzsaw99's picture

nowadays with excel it's even easier than that. 

let's "adjust" the value in this cell and see if that makes gdp come out better...

Dg4884's picture

Why even read this article?  It's 8 years too late.

buzzsaw99's picture

this really isn't bad for a chs product.  sometimes he goes completely off the rails in the first paragraph.

Five Star's picture

One thing is for sure. The Fed doesn't know. In December 2007, after a recession had already been declared by the Fed, the probability of a recession was still only 9.52% based on their model...



goldoverbtc's picture

Well this is why we are trying to start a war that will disguise the truth.  The China and Inida issue can explode any moment into a war not to mention the North Korean deal.  China is becoming beligerant on this issue.  The rhetoric has increased between China and India like never before.  This will hide the truth of what is going on in China and all countries.