It's official, not only is the U.S. in a recession, we've been in one for a year. The word comes from the National Bureau of Economic Research.
Sharla Jessop is Vice President of Smedley Financial Services in Salt Lake City. She says a recession is when we no longer have growth in the economy, sometimes with negative gross domestic product.
"Gross domestic product is driven by consumer spending, by a large portion. So consumers have to feel comfortable spending again before the economy will turnaround," Jessop said.
The numbers show what has defined this as a recession:
- Economic growth in the U.S. peaked in December 2007
- That peak followed 73 months of expansion. The previous expansion period of the 90s lasted 120 months.
- Following the December 2007 peak, the payroll employment measure has dropped every month since.
- The National Bureau of Economic Research does not use the standard "two quarters of decline in Gross Domestic Product" definition for a recession. Instead, it considers a recession to be a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.
Jessop says we need to take some of our Black Friday mentality with us to help dig back out.
"People drive all over, they get up early to save some money. But when the market's down, people don't use that same logic to buy their investments and their stocks," she said.
She says now is not the time to panic. Jessop says you can watch the market to see what happens next. Traditionally the market's recovered before a recession has ended. She says now is the time to be diligent and keep putting money in your 401k.