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To Recession or Not to Recession? That Is the Question.

With Apologies to Shakespeare

The title of this article is both bad Shakespeare and bad grammar, but nevertheless, it is the question on the minds of U.S. consumers, small business owners and politicians: Are we in a recession or not? And what can retailers do, whatever we call the current economic environment?

You will get different answers to the question, "Are we in a recession?" depending on who you ask. The answer may be moot when costs are rising due to record-high fuel prices and container shipping costs increasing by a factor of 10 or more from two years ago. Those factors alone will impact retailers both large and small, whether it's defined as a recession or not.

A recent survey of 133 CEOs found that the majority believe the Federal Reserve's plan to raise interest rates to curb inflation will spark a recession, but they think it will be mild. Some, like Elon Musk of Tesla and SpaceX, believe we are already in a recession. On the other hand, Best Buy CEO Corie Barry sees an economic slowdown, but not a full-on recession.

Is a recession ahead or we already in one? Or does it matter?
Photo by Photo by Brett Sayles, Pexels

Some point to the technical definition of a recession as two quarters of negative GDP growth, which is what we have just seen, but Biden administration officials insist we are not in a recession. When all is said and done, does it really matter if we are technically in a recession?

Marcus Sheridan, of River Pools and Spas, writes that small businesses are more nimble than larger ones - like a David among Goliaths - and so can respond more quickly. He says the economic crisis of 2007-2009 was "a truly formative one in my own development as a businessman and leader," but no two economic downturns are the same.

Sheridan advises "seeing opportunity in every challenge." Economic downturns are inevitable and a natural part of the business cycle. While you can't control the economy, you can prepare during the good times, knowing the good times won't last forever.

Transparency is important, Sheridan adds, and small retailers have an advantage over larger businesses with big bureaucracies. If owners and managers are transparent with employees about the status of the business, they will be more likely to be understanding and cooperative when changes are necessary to deal with a shifting economic environment.

Despite recession talk, the largest mall owner in the U.S., Simon Property Group, says in a CNBC report that mall and outlet center occupancy has increased from 91.8% June 30, 2021 to 93.9% as of June 30 of this year. "Even with with what’s going on in the world, we really haven’t seen anyone back out of deals," Simon Property Chief Executive Officer David Simon said.

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