Where’s the Recession?

Economic Update from Bluegrass Legacy Group – March 2023

We are constantly being asked by our clients and others in the community if we are in a recession or if not, is one coming.  Our trusted friends at Bluegrass Legacy Group shared the below thoughts with us and we wanted to make sure to share them with you.


For nearly a year now we have heard forecasts and predictions of recession from Wall Street all the way down to Main Street. Will it be a soft landing? Will it be a hard landing? Will there be no landing? When will it hit? How deep will it go? How long will it last? While all these questions are indeed compelling, the most obvious question that very few seemed to ask is perhaps the most important: Is the recession already here?

By the classic definition of a recession (two quarters of negative GDP growth), the answer is No. From the looks of the economic indicators, we may not experience that during this economic cycle. But we MUST be in recession. Have you seen the price of eggs??

By another definition, we may actually be experiencing a different kind of recession which economists describe as a rolling recession. In a rolling recession, the economy doesn’t categorically retract. Instead, the recession is felt in pockets at a time. Industry after industry embraces their own micro-recession and subsequently hands the baton off to the next sector of the economy to go through their own targeted economic cycle. As a whole, the economy never officially enters a recession, but the wave of financial contraction is embraced over several quarters.

Economist Ed Yardeni is credited with coining the term “rolling recession” to describe the economy back in the mid 1980s. He used the label again in an interview with CNBC’s Squawk Box this past September.

As we reflect on the past year, we can see the Housing sector got hit first, followed by Manufacturing and Materials. Next up it was the big Technology firms turn to suffer. More recently we have seen Banks, Venture Capital firms, and others in the Finance sector suffer.

All of this points to the natural question of what industries will get hit next. Assuming the trend continues, the likely candidates would be Consumer Discretionary or perhaps the Service sectors as the full impact of economic contraction and rising interest rates are experienced.

If you’re waiting for some large, obvious sign of recession, it may not happen this time. Economic indicators and leading economists are increasingly pointing to a more elongated, rolling recession which is felt incrementally over time. At a time like this, it is more important than ever to remain flexible and ensure your business and personal finances are prepared to ride the wave.

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