No doubt now...

Now I know we're in a recession.  But I don't need a tanking stock market, an emergency 75 bps rate cut, a $150 billion "stimulus package," or any other conventional signs of panic to tell me that.  I don't even need Nouriel Roubini, hanging crepe with the Davos crowd this week, to tell me.  No, I humbly submit my incontrovertible evidence here:

Starbucks Corp., the company that popularized the $4 cup of coffee, is testing a $1 cup and free refills of some of its offerings.

The Seattle coffee giant is experimenting with selling
the $1 "short" brew in the Seattle area, spokeswoman Valerie O'Neil

The eight-ounce short size isn't on Starbucks's menu
but has long been ordered by in-the-know patrons. Typically, a short,
brewed coffee would sell for around $1.50, although that can vary by
several cents depending on the store. Starbucks is also testing the
offer of free refills for traditional-brewed coffee in the Seattle area.

A company flack went to great pains to say this was not — repeat not — a new business strategy.  But…

Last year, Starbucks blamed a slowdown in customer traffic on pressures
on consumer spending. The company has raised its prices in part to
offset the high cost of milk, a move analysts say has eaten into sales.

And that was before Merrill Lynch declared a recession in progress, before politicians even started realizing people really were worried about the economy.  (Neil Cavuto, of course, remains in denial, even now.)

The question is, will Starbucks be able to hold the line on its experiment if, as our Maniac Trader Kevin Kerr predicts, coffee prices will zoom up this year.

The Daily Reckoning