With economic terror sweeping the globe, the question of whether Bermuda is in a recession — or heading for one — is on everyone's mind.

US Consul General Gregory Slayton told a meeting of reinsurers on Wednesday, Bermuda "is in a recession" but by a traditional economic definition of a recession — two quarters of negative economic growth in gross domestic product — it is too early to make such a claim.

In fact, most recessions can only be confirmed after they have happened.

Bermuda College economics professor Craig Simmons told The Royal Gazette hard data to support whether the Island is currently in a recession may not be available till 2010.

"A recession is a period of negative growth (in constant or real gross domestic product) over a period of time, usually six months (or two quarters)," Mr. Simmons said. "The data to support that claim have not been released and will in all likelihood not be released until January 2010."

In the absence of that data, however, Mr. Simmons suggested retail sales data (from the Government's Retail Sales Index, which is released monthly), could be used as a "proxy" for GDP figures. Going by the figures released over the last six months, a case could be made for recession, he said.

"These data are released on a two-month delay," Mr. Simmons said. "In each of the last six months, with the exception of April, RSI has decreased."

Mr. Simmons cautioned, however, that overseas spending by returning residents had increased in each of the last six months, except April and July when it was flat, which makes spending alone a less than reliable indicator.

But, "when taken together, spending is down, giving credence to Mr. Slayton's assertion that we are in a recession", he added.

Bermuda is not the only country wondering whether it is in a recession. Neither the United States nor the United Kingdom have said they are in a recession, although it's widely assumed a global one is imminent.

Few seem brave enough to commit to the "R" word yet — the global economy is "sliding into recession" or "recession is looming" or "signs point to a recession" and market dives are driven by "recession fears".

Yesterday, the world's eight richest nations — Canada, France, Germany, Italy, Japan, Russia, the UK, the US, and the president of the European Commission — issued a joint statement saying they will continue to work diligently to avoid a global recession.

When the British Broadcasting Corporation (BBC) looked at the questions of "recession" in July, it found: "Currently, the UK is not in a recession or even on the verge of it. The economy grew 0.3 percent, on a quarterly basis, between January and March — weak by recent standards but still in positive territory. The government is currently forecasting economic growth of between 1.75 percent and 2.25 percent in 2008."

Many, however, said the UK government's projections were overly optimistic given economic conditions, which have steadily worsened worldwide since that time. The last time Bermuda's Finance Minister Paula Cox advised the country of economic growth projections was also in July when she told Parliament the 2008 growth forecast was being cut back from 2.5 percent to three percent (predicted in February's budget statement) to two percent to 2.5 percent, citing rising inflation, falling visitor spending and the global economic slowdown.

Nevertheless, the prediction was still for positive growth in 2008.

In the face of a "recession", Mr. Simmons said yesterday Government should act with its wallet to keep the Island economy stimulated.

"Government spending should run counter to the private sector," he said. "So when private sector spending is growing, government spending should be contracting and the government budget would run a surplus. Now that private spending is shrinking, government should be increasing its spending to compensate and stimulate the economy."

He said the Bush administration's January tax cut (equal to about one half percent of US GDP) had helped keep that economy out of recession.

"Whether the increase in Government spending should take the form of a tax cut or an increase in say, capital spending, is subject to debate," he said of Bermuda's case. "I would favour income supplements to families below the poverty line and little change to the proposed capital spending on infrastructure, such as improvements to the software side of education — curriculum and teaching; as well as improvements to waste management, policing and courts, and Club Med remediation."

Chamber of Commerce president Philip Barnett also suggested spending as a recession solution, adding that the US is in a recession even if the jury is out on Bermuda.

"The US is absolutely in a recession and while the technical terms of a recession may not be met where Bermuda is concerned, it is clear people are becoming very wary of spending their money," he said. "The Chamber would encourage Bermudians to spend locally to support local businesses which would in turn help Bermuda to weather any global economic situation.

"They say the only way to get out of recession is to spend your way out of it. So people shouldn't change their spending habits. If you need to buy your child a pair of shoes, then buy them. If you want to go out for dinner, then do so."

Mr. Barnett added: "It's worth noting that Bermuda's banks are well capitalised and that the real estate market is still holding. Are we affected by the current US economic issues? Absolutely! But if we don't panic we will be in a better position than other jurisdictions to weather the storm."

If the Island and other nations are in a recession, the question then becomes, how severe is the recession? Is it mild, where recovery is seen within a year? Or is it a depression, where real GDP declines by more than ten percent?

Real depressions have been rare in those terms and the US has not had one since the 1930s.

But as former US President Harry S. Truman is attributed to saying: "It's a recession when your neighbour loses his job; it's a depression when you lose yours."