There is no need to listen to the talking heads and pundits to figure out if we are in a recession. All you need to do is look at yourself. We are not unique. We are part of the crowd. Whatever we do, chances are, millions others do too.

The US economy is consumer oriented. If consumers don’t consume, producers won’t produce, and sellers won’t sell. What are YOU doing?

Are you considering purchasing a new large SUV within the next 3 months? If not, there go GM, F, and auto parts supplier stocks. How about borrowing against the equity in your home for major remodeling or a dream vacation? Not this year? There go HD, airline, and hotel stocks. The list goes on and on: are you eating out less, postponing major purchases, wearing your clothes a season longer, not looking forward to a merry Christmas?

If consumers simply postpone major discretionary purchases for three months, there’s your recession.

People’s resources are not endless. Are you spending the promised salary hike or bonus, dipping into savings, or maxing out credit cards? If it’s the latter, how far are you from hitting a brick wall? And then what?

Did you spend the tax rebate on a new suit or to clear up some credit card delinquencies? Are you charging gasoline and food?

Businesses do not operate in a vacuum either. If orders come in soft, they cut production, freeze hiring, and postpone equipment upgrades. When they start losing money, they lay off workers. Is your job secure? Are you considering a career change or simply holding on to what you’ve got, happy you still got it?

There is a phenomenon that Mark Weaver (1) calls a “buyers’ strike”. Consumers try to maintain their standard of living for as long as they can. But when they run out of resources, they stop buying EVERYTHING except necessities. Retailers stuck with unsold inventories start slashing prices but consumers won’t buy on the expectation of even MORE price cuts.

A buyers’ strike can send a shock through most of the economy that will plunge it into recession. The really tough part is that whatever you do that helps YOU survive the tough times brings tough times on the COUNTRY. Unfortunately, when the economy hurts, we don’t all just get a scratch. Some get laid off and lose everything, others survive the setback, and some prosper. The weakest links break.

No matter where we are in an economic downturn, the pundits always seem to see better days two quarters from now. Never mind that it takes years for those two quarters to arrive, causing a lot of head scratching: “According to OUR CALCULATONS, things should be fine.” Problem is, these “calculations” fail to take consumer behavior into account. Once we go into bunker mode, we don’t get out until there is OVERWHELMING evidence that it is safe.

So, next time you want to ask “Are we in a recession?” – simply look at where you are in the big scheme of things.

(1) Mark Weaver “The Technique of Short Selling”, Investors’ Library Inc., 1963.

Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC – a provider of proprietary trading data that swing traders can put to work right away. http://www.tradingzoom.com/

Article Source: http://EzineArticles.com/?expert=Slav_Fedorov