If you have a tough time telling the difference between the plodding U.S. economic recovery under way and the dark days of 2009—you’re not alone.
Tom Porcelli, chief U.S. economist at RBC Capital Markets, recently coined the term “flash recession” to describe brief periods like last August, when the sputtering U.S. economy appeared to completely go off the rails. “You had essentially zero job growth and you had virtually no consumer spending—that’s a recession,” Porcelli said during an interview earlier this month with Yahoo! Finance. While Porcelli acknowledged one month of negative economic growth doesn’t meet the traditional definition of a recession, he argued that the current recovery is being driven more than usual by rising and falling consumer sentiment, while longer-term indicators like unemployment, stuck at around 9.1 per cent in the U.S., refuse to budge.
That would also explain September’s sudden spike in positive data—rebounding auto and chain store sales—as a flash recovery. And if Porcelli is correct, gauging the health of the U.S. economy just got a lot tougher. That’s because it now requires figuring out what’s going on inside the heads of millions of jittery U.S. consumers at any given moment.