Leaper is right. We are not in a recession, according to the latest numbers. "Recession" is a term defined by a numerical measure, it is not defined by opinion---whether the opinion comes from red or Partial's dad or Warren Buffett. If the Gross Domestic Product (basically, the value of all goods and services produced by domestic businesses) recedes rather than grows for two consecutive quarters, we are in a recession. This hasn't happened. Look up the GDP numbers. The 4th quarter of 2007 still showed GDP growth, so we're not even halfway there.

But recession is not the sole measure of economic well-being. It measures economic output by our economy, but it really doesn't measure costs. And since it's the cost side of the ledger that has spiraled upwards (gas and energy costs, housing costs, healhcare costs, etc.) we've had hard economic times for a while now while not actually being in a recession. But those higher costs (along with other factors) have been a drag on output, and GDP growth has been slowing even though it hasn't gone negative. That's why many believe we will see a recession yet.

Also, some individual industries have been in a recession even if the overall economy has not been. Housing and lending sectors, for example, have been in recession for a while. But nobody seems to mention that these recessionary times were preceded by rapid and unsustsainable growth in those same industries. It's just a reversion to the mean, like we saw in the technology sector after the tech boom. Nobody complains when growth exceeds expectations, but everybody acts surprised when the industry gets ahead of itself and stumbles a bit. Nobody complains when their house doubles in value in a 5 year period, but then they complain when they find out afterward that it was overvalued after all? Common sense, folks.

A recession might happen, but then again it might not. Unemployment numbers are still historically below average. Businesses adapt and are still making money and producing goods/services. Most of you still go to work every day and create value for the economy. We will get past this housing & financing bubble and things will go back to normal.

Overinflated home values will stagnate or even fall, but the flip side is that inflated housing costs should stagnate or fall too. Creditors may tighten lending standards and offer less easy credit than before, but the flipside is that less risky lending should eventually mean lower lending costs from defaults. It evens out---it just takes time. How much time is the question. In the meantime, put one foot in front of the other and don't panic.