Are we in a recession?

I'm not an economist, but I think people are getting skittish about spending.

On Tuesday we went to support one of our local fire companies by spending some money at their annual carnival. This was at the one they had a couple years ago.

The other day I was having a conversation with my wife about the house my ex-wife and I bought back in 1991. It was a modest, older two-story home (built in 1925) of about 1100 square feet, in a settled suburban neighborhood and we paid $37,500 for it. As I recall, the interest rate on the mortgage was 6%, which is roughly what mortgages are now going for. At the time I was working as a CAD operator and my ex worked part-time in a grocery store, so nothing out of the ordinary for people in their 20s.

So I went to the CPI inflation calculator and did a quick check of what $37,500 translates to now and it came up as $86,985.62, exactly. Turns out in that zip code it’s still a pretty fair price for a home like that.

But then I figured out the income portion of it. Between the two of us I think we made about $22 an hour. However, to keep up with that modest standard of living we would now have to make $51.03 an hour combined, and therein lies the rub. Right now a CAD operator makes about $32 an hour, meaning the spouse has to pitch in at $19 an hour to have the same impact.

There are other factors to consider, though. Let’s say you have a kid or two - now you have to add in child care each week unless you can somehow work opposing shifts and try to sleep when they’re in school. Then you have utilities: two things we didn’t worry about in 1991 were a cable (or satellite) bill and expense for internet, but both are pretty much a necessity now.

Yet the signs I see in my little corner of the world tell me that we could be in for a rough ride.

My little corner of the world has a significant dependence on tourism, which is natural as we’re by an ocean. Yet in reading the local papers, they’re saying this summer is down for hotels and restaurants - on the other hand, condo rental is strong. And that trends to a shift in spending by families trying to save a shekel - instead of eating out for every meal, people are taking advantage of the kitchen facilities at the condos. Whipping up a light dinner (even if it’s just sandwiches) after a day at the beach is more relaxing than going out yet again.

Another factor as I see it is the idea of people working two, three, or even four jobs and/or side hustles to make ends meet and receive a full-time salary. If you’re working 40 hours a week between two or three jobs as opposed to the 9-to-5 workday, that’s an extra few hours you could lose to commuting or getting ready. If you don’t have time, there’s a pretty good chance your spending is not discretionary.

Broadly stated, a recession is defined as when our GDP declines for two quarters in a row (unless a Democrat is in office, in which case there is no such thing as a recession regardless of GDP decline.) What’s funny about this is the fact that a portion of GDP (as defined) comes from government spending, which never goes down. It has probably cushioned some of the blow that a decline in personal spending creates.

But what really gets me is the lack of value we’re creating with our spending, thanks to inflation. In varying amounts I am compensated by my full-time job, my part-time job as a writer, and other side hustles including this Substack.

In my full-time job we have a number of repeat clients who keep coming back, so it’s obvious we’re creating value for them. I also create some value for my writing client, who comes back every week and asks me to do another piece for them. (That whole enterprise is run by private donations, so we are earning our keep.) The same goes for a builder friend who occasionally uses my expertise at things like doing a REScheck because I turn them over quickly, meaning less hassle for him. I even create value for those who support me with a paid subscription here. (A good time for this button:)

On the other hand, our government’s policy seems to be that of creating the least amount of value from the most paying positions, as many government employees create regulations and others push paper around (at least figuratively since it’s all on computer now.) If I see a guy out working construction building a house, a farmer out working his field, or a waterman plying his trade, I know he’s creating value. If I see a city councilman bringing up an “impact fee” or restriction, an environmental group pushing for land restrictions, or pretty much anything the Chesapeake Bay Foundation dreams up, I know they’re making that work less valuable.

In America, we used to make things. My hometown got its reputation by building stuff like Jeeps, glass, spark plugs, scales, and GM transmissions. They still produce some of that stuff, but much more of it has moved away or overseas. Now it’s said that we have moved beyond that by becoming more of an information economy, but tell the people who have all the rare earths about how they have us over a barrel because of technology.

I know Rush Limbaugh used to talk about how he wasn’t going to participate in a recession, but the sad fact is that most of us are barely getting by. Yet many will willingly vote for the same tired policies.

I’m going to share a little something. Perhaps it was sheer coincidence, but I was laid off from my job right after the 2008 election and I was furloughed for eight years. (I did other stuff in the interim but occasionally kept in touch with that employer, who hated to let me go but had no work. I was supposed to come back “after the holidays” but was never told which year.) My call back came in the early days of the Trump administration, as I was the first hire he’d made in over eight years. I’ll always believe it was the optimism that our “jobless recovery” under Barack Obama was at last becoming a real recovery that got me rehired as business finally began to pick up. (It was the first blow to my #NeverTrump wall that collapsed in 2020.)

So you’ll pardon me if I don’t swallow the government line that everything is hunky-dory. (After all, these are the people who overstated job creation by 800,000 in the last year.) I’m not sure what’s propping up this house of cards, but I’m praying it doesn’t come down on my family.

Until next time, remember you can Buy Me a Coffee since I have a page there.