There’s been much debate on talk shows and in newspapers about whether the U.S., is in a recession or not. As a bankruptcy attorney in Indiana, I need to stay on top of all the economic news and debates. Not only does recession affect the number of bankruptcies, but it has an enormous effect on how quickly people can get back on track and rebuild their financial lives after filing bankruptcy.
The Wall Street Journal, a week or so ago, carried comments by Edward Lazear, chairman of the Council of Economic Advisers and the White House’s top economist. “The data are pretty clear that we are not in a recession”, said Lazear in an interview with WSJ. He went on to explain that the Council of Economic Advisers defines recession as “a significant decline in economic activity that lasts more than a few months.” The measurements used are gross domestic product (how much our country produces in goods and services), income, employment, industrial production, and wholesale-retail sales.
Lazear said only two of the items on that list are in recession range: retail sales and manufacturing activity. The portion of Lazear’s remarks most telling to me is that manufacturing productivity jumped 4.1% in the first quarter. That means companies are cutting back on workers and number of hours worked. Well, for my clients, that’s where the pain is! Job layoffs are one of the three big causes of bankruptcy.
Remember that famous line from Shakespeare: “A rose by any other name would smell as sweet.” We may not be in a recession according to the technical definition from the Bureau of Economic Research. But I’m tempted to recall another well-known saying: “If it walks like a duck…..” And, as I’m sure you’ll agree, it’s not a rose we’re smelling right now!