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Have you ever said a word so much it begins to lose its meaning?
It becomes strange, unfamiliar, and sounds foreign?
It can happen with any word. Even your own name. (Try it. It’s weird.)
The first time it happened to me was with the word “deteriorate.”
It started when I noticed how weird of a word it is.
“Duh-tear-ree-or-ate. Is that right?”
The more I thought about it and said it, the more confused I became.
The word morphed into something strange. Alien. Primitive.
Grunts from a prehistoric tribe.
I started asking myself if it wasn’t actually a word. Perhaps I’d made it up!
This is a psychological effect called “semantic satiation.”
It's when the brain becomes desensitized to the repeated stimuli of a specific word, causing the word to lose its familiarity and meaning for a short period.
I bring this up because of CNBC reporters recently.
They kept using the “R” word….
You know the one: Recession.
By the end of the segment, I wasn’t even sure if they — or I, or anybody — knew what the word meant.
That sent me down a rabbit hole. It got me thinking…
Recessions Aren’t Real
Recessions are weird.
The more you think about them, the weirder they become.
Yes, the economy is cyclical. Downturns aren’t just inevitable, they’re healthy.
BUT
Economic cycles, including recessions, are not just determined by clean and predictable financial indicators but also by psychological and sociological factors.
Collective mood, media reporting, and public sentiment play a substantial role in shaping economic realities.
And they can be manipulated.
A.] The Fear Factory
Every time the media starts shouting “recession,” what happens?
Panic. Fear.
It's like Halloween but for adults.
And this fear isn't just innocent fun – it moves markets, influences decisions, and causes real harm.
Give me an example of when the media saw a chance to scare the crap out of you and didn’t take it?
I’ll wait.
B.] Recessions are Relative
Consider this – what's called a recession in one country is a day in paradise in another.
Economic conditions are relative.
If the standards are so skewed, can we really trust this whole concept?
C.] The Recession Whisperers
Imagine a secretive group, not in some government bunker, but in a quiet office in Cambridge, Massachusetts. That's the National Bureau of Economic Research (NBER), the recession referee.
But here's the twist: By the time the NBER declares a recession, it's like announcing rain when you're already soaked.
Their method involves a retroactive look, meaning they wait for six months of data, plus a one-month lag.
So, when they finally declare a recession, it's old news, a story you've been living in, not just reading about. In the world of economic predictions, the official-unofficial referees are not the early birds; they're the historians.
Also…
D.]The GDP Puppet Show
GDP.
It’s supposed to be a “health check” for the economy.
BUT
It's like going to a doctor who only measures your height and ignores your blood pressure, cholesterol, and heart rate.
It counts every dollar spent, regardless of what it's spent on.
That means disasters, wars, and environmental destruction all pump up the GDP. If a hurricane hits and we spend billions on reconstruction, guess what? GDP goes up.
Celebrating a GDP increase is like throwing a party because your house burned down and you had to rebuild it.
It’s also the main indicator the NBER uses to measure a recession.
The real problem with this is…
GDP is a broad measure and can be influenced by short-term fluctuations that don't necessarily reflect long-term economic trends.
It’s a useful indicator, but far from comprehensive.
E.] The Self-Fulfilling Prophecy
Here's the kicker – by declaring a recession, we make them more likely.
It's a classic self-fulfilling prophecy.
Businesses pull back on investment, consumers close their wallets, and just like that, the economy slows down.
But what if we didn't buy into the narrative? I have no idea.
F.] Rage Against Determinism
Economies aren’t deterministic. They’re dynamic.
Economies don’t follow a predetermined path.
Human agency and perception play a significant role in shaping economic realities.
Predictions are usually wrong for this reason.
Also, there’s this…
G.] The Hidden Agenda
Tin foil hat time.
Think about who benefits from recession talk.
The media gets a juicy story.
Politicians get a scapegoat.
Certain investors get to buy low.
It’s a game, and the average person isn't the one winning. You’re always being sold a narrative that serves others, not you.
And Yet, a Recession is HERE
Of course, recessions exist. Because prolonged downturns exist.
But all of this calls into question what we think we know about the word “recession” and how we talk about it.
It’s not as clear a concept as we think.
Nevertheless, it’s probably here already.
As our Paradigm colleague Jim Rickards put it:
“To gauge recession risk today, moving beyond long-term, technical indicators like inverted yield curves, we're now seeing more immediate signs. Stock market stagnation, evident in major indices failing to surpass their peaks from early 2022, suggests an economy losing momentum.
“These immediate indicators,” Jim concludes, “coupled with the earlier technical ones, paint a picture of an economy potentially already in recession. Consider caution.”
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