Inflation or recession? Give us your perspective

11 02 2008

Inflation or recession? Give us your perspective

Posted by: in Products and Services

Filed under: Forecasts, Products and services, Management, Industry, Consumer experience, Employees, Personal finance, Recession

Inflation: “An increase in the amount of money and credit in relation to the supply of goods and services; An increase of the general price level; An excessive or persistent increase in wages and costs causing a decline in purchasing power.”

Recession: “A temporary falling off of business activity during a period when such activity has been generally increasing.”

(Source: Websters New World Dictionary, Third College Edition)

Rather than an opinion piece, which is what I generally write, this tiny snippet is meant more as a discussion generator than a statement of my own economic view. I earnestly invite our readers to weigh in on the matter. Inflation or recession, are we now experiencing either or both?

In the realms of higher finance and investment, the term “recession” is being deftly avoided, yet at street level we’ll tell you without question that local business activities are cooling. You’ve seen the numbers, disposable income is drying up. Are we being blinded to the rock bottom truth of the matter by domestic corporations which can underwrite their balance sheets with growth they’re accomplishing abroad, or are we finally paying the price for 30 years of sloppy consumerism which foolishly insisted on always buying goods from the cheapest producers possible?

Inflation, on the other hand, is much harder to get a fix on. That seems to be because what we’re experiencing doesn’t fit the text book definition. If wages and benefits were increasing at a yearly rate of about 8%, then I think we’d have actual inflation. Unfortunately, what we’re seeing is merely an increase in costs to the domestic consumer. The wages part of the inflation definition has refused to keep up, hence our apparent tendency towards actual recession.

So what is it folks, inflation or recession? Or is it a tiny of both? Personally, I’ve termed it; “World wide economic shake down,” and I think we’re just getting started on it.