is there a recession

Almost every human being has to say something about the ongoing recession. A walk around the Hindu College campus proves the point. Job seekers (like me) crib about the impact on their placements. Avid readers crib about the ‘crisis’ of other news in the newspapers and magazines, pages of which are full of what the ‘experts’ have to say about the recession and ‘party animals’ crib about the scarcity of parties happening.
At the risk of penning down platitudes, I have to say something too.
Recession, I believe, is like an electric bulb, a steam engine and like all others major innovations, in that it is first produced in the mind itself. In other words it has, initially, a blueprint in the mind and then takes a physical manifestation. Recession, if you have it in mind, will impact everything around you. However, considering even a simple thing like frequency of your visits to the local “chaiwala” denies the presence of a recession.
Let me try finding the causes of this contradiction between the mind and reality with the help of expectations approach.
Adaptive expectations – Just think of it. What was the most oft-repeated word last time you picked a newspaper or had some serious discussion with a friend. With a good probability, it was “Recession”. My personal observation is that the probability is almost next to impossible that a two-hour discussion does not contain the word. This is what the adaptive expectations hypothesis proposes. Since you had the word ringing in your mind the last time you had a discussion, you are to believe it next time you have a discussion.


Rational expectations- Not just the discussions, but there are various other reasons why we actually believe there is a recession lingering all over us. Human beings take into account every accessible information to make a belief. Finding the genuineness of the information itself can be an arduous task, leave alone that of the belief. The lack of companies visiting the campus, the difficulty in finding sponsors, etc. are but some of the reasons we have come to believe there is a recession.
To cut the point short, it is both these hypotheses that go on strengthening our beliefs. Due to adaptive expectations, we feel the presence of recession. However, the factors mentioned above go on solidifying these beliefs.
It is also true that we tend to ignore the cases which prove otherwise. It was this trip to a UCB sale last month which made me believe there really isn’t a recession. Hordes of Delhites ( you can point them out) queuing up . It was my first experience of witnessing demand exceeding supply , and by far. I do not claim to contest the cause of changes we have seen during this ongoing financial year. However, recession is too strong a word to describe it. Number of placements is still a positive figure . It is just the cooling of overheated strucure and not a recession per se.