There are statistics and then there's what you see with your own eyes. The economic data has been uniformly bad and getting worse for several months. It now seems the British economy could contract by a staggering 4% in the first quarter, the sharpest decline since the 1930s and there's little real evidence of a return to solid growth.
After weeks of crisis and a slump to levels not seen since the mid-90s, the stock markets rallied strongly on the evidence of a positive memo from Citigroup and some encouraging comments from Bernanke suggesting the recession would end this year and the US economy would grow in 2010. Indeed, there are those who think we've done better in the first couple of months of 2009 than the doom-mongers were suggesting.
Indeed, retail sales did well in both January and February and when Mrs Stodge and I visited Lakeside last Sunday, there seemed precious little sign of a recession. The crowds were out, the Apple and Carphone Warehouse shops in particular were busy and there looked to be a lot of spending going on.
Yet, at Gallions Reach on Monday, it was dead. I think I know what's happening and what makes this recession different from others in recent times.
IF you are earning and have a mortgage, these are great times as long as your job is safe. The collapse in interest rates has slashed your monthly mortgage payments to ribbons, you have extra disposable income to spend. It is the working families who are booking the holidays and buying the gadgets.
The victims are those living off savings, often the elderly or the retired. For them, incomes have been slashed with the collapse in rates and they are cutting into real capital sums to survive rather than living off the interest. In the recession of the late 80s and early 90s, interest rates were high and those with mortgages suffered. Now, it is the other way round and it's having a massive effort on weekday retailing while I suspect weekend retailing isn't suffering as much.
There still seems plenty of consumer confidence out there for those with the money to spend but as unemployment grows, that is likely to change. Nonetheless, this is a different kind of recession and the rules of past recessions may not apply.
IF increasing the money supply fuels higher inflation and higher interest rates, the recovery risks being choked off if consumers who are spending freely now are forced to cut back.