Recession or nah? Signs say, as they often do, that anything can happen in 2019

The Dow Jones Industrial Average is up roughly 50 percent from five years ago. Washington’s unemployment rate is at lows not seen in at least a decade and a half. You’re paying more than a dollar less per gallon of gasoline than you were a decade ago. Interest rates, too, are at 2008 levels.

There — four economic data points to make your days merry and bright, each with some (and maybe a lot of) relevance to your economic life.

So why is everyone moping around as though Christmas got canceled this year, and next year isn’t looking terribly certain either?

To read the headlines and commentary, the end is near of a recovery and expansion that wasn’t all that great anyway. Gloom, despair and agony, in the form of recession, will soon be upon us.

What’s to blame for the sour public mood?

At least some of it can be credited to the surly political climate, with considerable justification. In the spirit of bipartisanship and unity, let us come together to acknowledge that the current crop of politicians, regardless of party affiliation or ideological bent, is the worst lot in recent memory, only to be outdone by the next collection of bloviaters, mugwumps, know-nothings, four-flushers, bottom-of-the-deck dealers, loose cannons, snake-oil sellers, carnival barkers and dog-and-pony-show ringmasters.

The public isn’t much happier with the business world either. Everyone purports to hate Amazon, Google, Facebook and the Generals (Electric and Motors). Boeing has had issues of late; even the oft-revered Apple has had to endure criticism.

Nor is anyone particularly happy with the neighbors, whether the definition of neighborhood means regionally (Seattle vs. the rest of the state), nationally (California vs. Texas) or globally (Europe, China, Russia and the United States vs. each other, along with other players joining in various frays).

Those are all substantial contributors to the current and pervasive atmosphere of fretfulness, but here are two that may be even more significant to understanding we’re not so much walking into 2019 as slipping, tripping and stumbling into the new year.

Reason No. 1: The trend line. It’s not just the number and how high or low it happens to be that matters, it’s the direction from which you arrived at it.

A Dow at more than 22,000 in 2018 would have been regarded as a miracle even five years ago, when it was about 15,700. Seen from the perspective of the Dow above 25,000 a few months ago, it’s regarded as a warning signal.

Gasoline prices and interest rates are at historical low, but they’re gaining. The size and pace of layoff notices are picking up. The trend line is not moving in the right direction, and the danger is that in business cycles those trends can generate a self-fueling momentum of their own. That makes prospects for a soft landing as mythical an occurrence as sitting down to dinner with Sasquatch.

Reason No. 2: The recovery that never felt like one.

For all the positive numbers put up in the current expansion, it’s never felt like a period that would have terms like “roaring” or “galloping” attached to it. Many Americans still are digging out from the last recession. They’re still feeling pinched between wage growth (modest if any) and expense growth (health care and taxes chief among them). They’re worried about the security of the jobs they’ve got. Some industries — retailing — still are going through dramatic restructuring, adding to the uncertainty.

Now they’re being given conflicting messages about 2019, that there’s still room for the economy to run and that a recession is overdue.

We could build an economic-predicting algorithm that captures retail sales, domestic oil drilling and production, the average length of economic expansions, trade flows, Amazon’s hiring pace, Boeing’s plane orders and deliveries, housing starts, truck and rail freight volumes, U.S. manufacturing gains from reshoring and a few hundred other variables, only to have it spit out an answer of “your guess is as good as mine.”

So here’s one more factor that could be as influential as any of the others: What sort of mood you’re in.

Every time there’s the prospect of a recession, economists and columnists talk about the dangers of talking ourselves into one. The theory is that consumers and businesses, fearing slower sales or lower income, pull back on their own spending and investing, thus making a recession a self-fulfilling prophecy.

Those consumers and businesses, by the way, are doing a wise thing in preparing for an economic storm that hasn’t arrived. There’s no national duty to spend, especially when it means depleting reserves or building debt. No good purpose is served by telling people to put on a happy face and pretend the good times are still rolling when recent experience and their knowledge of their own finances tell them that’s not prudent.

2019 may turn out to be a better or worse year, in business and economics, than 2018 was. It’s not likely going to be a cheerier one.

This story was originally published December 29, 2018 at 8:00 AM.