This recession’s a technicality

By Philip Porado | September 13, 2011 | Last updated on September 13, 2011
2 min read

Economic indicators and predictions have a downside. The data lags.

By the time economists make the call that a country has slipped into recession, the slowing job growth, lackluster consumer spending, slipping housing starts, and all the factors that go in to marking the GDP have been impacting your client’s lives for months.

Likewise, equity markets have been pricing in the factors that led to today’s recession warning for some time. A lot of people have lately been asking the question, “Where does volatility come from?” Perhaps the answer is: uncertainty and fear.

The most important thing to remember about recessions, and to tell your clients, is this. By the time a downturn has been formally called, it’s usually over or starting to mend. These economists aren’t saying anything your clients don’t already know.

Remind them of that.

When you do, though, avoid the mistake made by the elder president Bush who stood up on the campaign trail in 1992 and declared the U.S. recession over. Technically, he was right, but his comments made him seem out of touch to people who were still out of work – and there were a lot of them.

People who feel as if they’re struggling to make ends meet, or fear they soon may be, don’t like to be pandered to. So spare yourself any resentment by taking a page out of the other candidate’s playbook.

Tell them you feel their pain, and mean it. Take the time to learn what’s troubling them, and look for aspects of their lives that are going well so you can emphasize them.

If their jobs are stable, point that out. If education savings and retirement plans are on track, get out the tables and charts that prove it to them. Explain how the markets rebounded soundly from 2008, and make it clear they will do so again. Indeed, equity markets, while sideways of late, have given up far less ground during this dip and appear to show signs they anticipate corporate growth in the long term.

Now that the dreaded double-dip has been called, we can get on with the upswing.

Philip Porado