Australia (and most of the world) has entered in an economic recession. Let’s say it again: Australia is in recession.
These are words no politician ever wants to utter. To avoid saying those words, they engage in verbal gymnastics and obfuscation, often retreating to the formal economic definition of recession — two or more consecutive quarters of negative GDP growth.
But even the definition of a recession is far from universally agreed. Investopedia defines a recession as “a significant decline in activity across the economy, lasting longer than a few months … visible in industrial production, employment, real income and wholesale-retail trade”. Wikipedia defines it as “a contraction phase of the business cycle”. The US National Bureau of Economic Research describes it as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Most people don’t need to refer to wonks or websites to define a recession. When the value of their superannuation and home collapses by 30 per cent or more, when they or people around them lose their jobs, when every piece of economic news they hear makes them feel like spending less, when they see governments around the world committing hundreds of billions of dollars to prop up banks, when they listen to the Australian government introducing a guarantee on the safety of their bank deposits, when they walk into largely empty shops … they don’t need to go to www.recession.org or www.recession.com to realise what’s happening.
If it quacks like a recession and waddles like a recession it is, despite politicians dancing around the word, a recession. Maybe it’s time to fess up.