I read that recession nonsense in the paper.
The stock exchange people feared a recession so they sold their shares which (ironically) is what actually causes the recession. If those stock brokers wouldn't be so paranoid...
We could argue all day about what the current recession is (I happen to disagree with you) or even what indicates that we are in a recession (I've heard some doozies here as well) but keeping with the question in the OP, I think it's more relevant to look at the facts surrounding the lives of everyday citizens.
For years, people have been spending more money than they had coming in. Ever-rising house prices allowed folks to suck out equity at an alarming rate. Rather than looking at their houses as investments or just plain homes, they looked at them as ATMs. Many of these people had no business buying a home at all, but thanks to a perfect storm of personal greed and corporate greed, they were given loans that they had no chance of ever being able to pay off. The only way they managed to stay afloat was because the housing bubble was literally creating money for them out of thin air in the form of, again, rising house prices. The only thing sustaining that bubble was the banks' continued willingness to provide credit to the not-credit-worthy. But that didn't work out so well for them, the industry is facing massive losses, and they aren't writing the loans that would allow the real estate market to stay afloat.
So now the party has ended and the $600 or $800 or $1000 a month difference between the bills that need to be paid and the available cash coming in is getting to be a problem. Heating oil has more than tripled in price since 2001, gas is not far behind, and food prices on many items are through the roof. Health insurance/health care costs are increasing by double digits every year.
So, if you're Joe American right now, you have income that doesn't cover your expenses, no savings, your pantry is empty because you thought buying interest in a timeshare was more important than putting back a few months worth of food for an emergency, and you've got a houseful of useless electronic crap that you can't even sell because no one else has the money to buy it. You maxed out your credit cards when their was no equity left in your house. So how are you likely to react?
"Badly" is the first word that comes to mind, but eventually reality will sink in. You can't go out any more for meals, might even have to learn how to cook, you have to scale back to basic cable, a $60 trip to the movie theater is now a luxury, and you're looking around for options. A new hardback probably isn't in your budget, but a paperback might be.
I'm guessing that as the next few years unwind (and yes, I mean years - we're in for a long, hard ride here) people are going to rediscover reading in a major way. I wouldn't be surprised if the publishers start releasing "budget editions" - the cheapest possible coverstock and paper - or offering other discounts, say packaging two or three of an author's works together at a bargain price.
Overall, I think the recession (or even depression) will be good for authors as far as being published and read. People really are going to be needing to escape their troubles. Advances and royalties, however, will probably go down.
