Where's the Recession?

If this is a recession, let's have more of it. So joke some shoppers trying to elbow their way through the crowds that are thronging the stores. K mart has rung up a sprightly 13.7% increase in retail sales so far this year, and even laggard Sears, Roebuck reported a 3.7% monthly rise in November, its biggest gain in more than a year. So where is the recession? Like a mugger, it could be lurking around the next quarter if it has not already pounced. Real personal earnings are down nearly 5% from last year, and there are signs that consumer spending is still powered largely by the inflationary psychology of buy now or pay more later. Even as they report their sales increases, retailers are noting that customers are taking longer to pay off their debts than they did six months ago.

What is deceiving is that this recession may be coming out in spots like a case of measles. The auto industry has been the first big one to feel it; sales are off 10% for the year and more than 16% for the last ten-day selling period. Housing is also hurting, and industry experts are predicting a decline of 20% next year.

Some fortunate parts of the country may not feel the recession at all. The Southwest and Intermountain West continue to surge, largely because of high demand for their energy resources; the Southeast is also generaly well off. But heavy industry areas of the Northeast and Upper Midwest, which rely largely on cyclical businesses, probably will take it on the chin.

The Consumer Price Index continues to steamroll along at 12.7%, but the prime rate, which banks charge their preferred customers, has come down a quarter of a point from its height of 15 3/4%. There is a feeling on Wall Street that rates have peaked. This has energized the Dow Jones stock market average, which rose eleven points last week, to close at 822, its best performance since the Volcker rally turned into the Volcker rout after Oct. 6.

Many measures of industrial activity are lower today than they were at the beginning of the year. Like theologians discussing how many angels can dance on the point of a needle, economists may argue tirelessly whether there really was a recession in 1979 and when it arrived. But there are many who echo Economist Murray Weidenbaum: "A year from now we will not be debating whether or not we had a recession. It will be clear."

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