One of the hottest arguements between economists is about how to detect an impending recession. One of the prevalent methods is to declare recession when the GDP has shrunk for two consecutive quarters. Another indicator is when the number of applications for MBA programs increase manifolds. But such leading and lagging indicators are useless to the common office worker who has to get the hint of recession well in advance to decide whether he should start cutting down on his Starbucks coffee. This has become all too apparent in the last few weeks which witnessed the sudden demise of the giants of the financial industry. Many of their employees had to hastily get down from a taxi halfway to catch public transport as they heard about the demise of their company en-route.
So how does a common man find out if a recession is impending? The best way is to look for signs at the workplace. Of late, have you been asked by your supervisor to book tickets on low cost airlines? Has the pantry in your office been stocking up less and less food? Do you find the office printer often without paper or cartridge? Has the person in charge of office stationary been telling you that there have been no fresh supplies of pens for a while? Has the receptionist’s desk in your office been empty for the last few days? Did your last month’s salary come a few days later than the usual day? Did the finance department not pay some items in your reimbursement claims without giving you any reason?
And to confirm that recession is really on, it’s best to take a stroll in the shopping mall. Are there fewer smartly dressed sales people offering you a credit card? Yes, there are many more things on the list now that money can buy but your credit card can’t. But is the grocery store suddenly claiming that it has gone green and started charging for plastic bags? Or is the store consistently warmer than usual because some air conditioners have been turned off?
But what then is the surest sign of recession? That’s when the finance minister of your country keeps telling everyday that the economy is doing fine.