Though the country is not technically in a recession by the traditional definition (two consecutive quarters of negative GDP growth), other standards such as a significant decrease in economic activity, job loss, flat production and decelerating sales and income growth result in indicate otherwise, said John W. Bitner, senior vice president and chief economist of Eastern Investment Advisors, Boston.
"Yes, we are in a recession," Bitner, adding that "the consumer is the Achilles heel to this recession. … As the consumer goes, so goes the economy."
The sales boost resulting from the Federal stimulus checks should begin to wear off by the fourth quarter, just as home heating bills hit. As a result, holiday sales remain a concern, Bitner added. And development will remain difficult.
"I've been through four [recessions] and all are different, but this is the worse we've seen," said Stephen R. Karp, chairman of Newton, MA-based New England Development. "You need more liquidity and the economy will have some trouble getting things built for the future."
Still, noted Bernard I. Schachter, senior VP of Framingham, MA-based Staples, recessions are never uniform across the country and in fact the current downturn is not being felt in New England to the same degree as other states, such as Florida or Nevada.
"What worries me the most is the energy situation," Schachter said. "We don't know how high up is."
The result is a consumer that is trading down, spending more money on food, fuel and paying down record debt. Retailers are focusing on execution rather than store growth.
"Everyone has looked at capital spending," said Mark Walker, vice president and real estate director of TJX Cos., Framingham, MA. "There is a lot of pressure from Wall Street that now is not the time to build new stores."
Many new developments, too, have fallen by the wayside. But retrenchment can prove advantageous for more solid companies, said Stephen E. Sterrett, executive vice president and CFO of Simon Property Group, Indianapolis.
"This is a great time to be the 800-pound gorilla," Sterrett said. "There will be a lot of wrecks on the side of the road that will present growth opportunities."
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