NEW YORK (CNNMoney.com) -- The question for many economists is not if the U.S. economy will fall into a recession. It's whether it already has.The formal recognition of a start of a recession probably wouldn't come for at least six months if not more than a year, as official judges from the National Bureau of Economic Research (NBER) pour[sic] through various economic readings.
Usually I'm an optimist. By the mid-Eighties, I was no longer scared of the Russian Bear. In the early Nineties I won money from pessimistic baby boomer friends by covering bets on the Gulf War (although I'd guessed two weeks to Baghdad; the Army beat the point spread.) I'm generally not a doom 'n' gloom kinda person, but I have to disagree with pdb's sanguine take on the economy. I think our only hope in the near future is that things will just be Carter-in-the-70s bad instead of Roosevelt-in-the-30s worse.
My reasoning is based on a confluence of several different factors: First, the foreclosure pig hasn't passed through the mortgage python yet; we won't know how bad things will really get until the bulk of the loans reset to their shiny, higher rates early this year. Second, more and more baby boomers are due to start cashing in on their retirement funds here in the near future, because they won't take fifty shares of IBM at the Piggly-Wiggly. Thirdly, energy and metals prices are high and climbing higher due to increased worldwide demand and a sagging dollar. Fourthly (and hopefully lastly) is that the minimum wage is due to climb this year because a bunch of cretins in congress think you can just wave a legislative wand and magic everyone rich, not stopping to think that the money to pay the burger flippers has to come from some place (HINT: Laid-off burger flippers and more expensive Big Macs and we're all right back where we started, except less of us are working.)
Now, provided that nothing else happens, we should just see a nice 70s-style recession. Unfortunately, there are plenty of things that could happen. China could mess with our money by selling off dollars or floating the Yuan. A liberal Democrat or big-government Republican could get in the White House and, with the active help of a Democrat Congress, start pulling levers left and right trying to play FDR. A destabilized Pakistan or an especially cranky Iran could cause a more general war in the Place That the Oil Comes From. Any one of these things (or more than one) could really tip things off the rails.
So, this is uncharted territory for me, this 'not being optimistic' thing. I think I'll take up vegetable gardening.