The Post Recession Economy

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The Post Recession Economy

What will the post recession economy look and feel like?  We’ve been through downturns before and have cycled back.  Why shouldn’t the same thing happen again with a bigger and better economy born from the dust of this carnage?  Isn’t that capitalism at its finest?  You certainly don’t want government support for buggy-whip makers after the automobile has become affordable, to site a classic example.

First, we should all be confident that this economic downturn will recover but I think what is of greater concern, is how that economy will function and what skills will be needed compared to what we’re used to.  Many people who survived the depression, never completely got over it with respect to their own personal values and behaviors, sort of the saving-for-a-raining-day mentality.  Perhaps you’ve seen or heard those lessons from your grandparents and how that message is so much more relevant today than it was a year ago.  Will all of our behaviors be changed for the rest of our lives, especially if this recession is prolonged and indicators drop further?  Will we ever think of real estate as a sure thing again?

Many economic records have been broken over the last six months which leads me to believe that the stock market might have plunged further had there not been regulations and mechanisms in place to prevent that, unlike in 1929.  Will we need all the retail and commercial space we occupied up until a year ago?  Retail is feeling this downturn more than most sectors as people just stop buying what they don’t need.  Is that temporary and will bounce back in a year or two or will we all be a little like our grandparents, many of  whom remained careful with their money, even if they had a lot of it, after the depression?

There have been seismic shifts in the global economy since the beginning of civilization.  Below are some examples throughout modern times I found in a book last year.

Revolution	Popular Name	“Big Bang initiating the revolution”	Year
1	Industrial Revolution	Arkwright’s mill opens in Cromford	1771
2	Age of Steam and Railways	Test of the ‘Rocket’ steam engine…	1829
3	Age of Steel, Electricity and Heavy Engineering	The Carnegie Bessemer steel plant opens in Pittsburgh	1875
4	Age of the Automobile, Oil and Mass Production	Ford manufactures the first Model-T in Detroit	1908
5	Age of Information and Telecommunications	The Intel microprocessor is announced	1971

What is the next row for this chart?

6

The Green Revolution

The premier of “An Inconvenient Truth”

2006

But now we’re transforming at a much faster pace as is everything in our world, but the outcome is less clear.  Some of these revolutions may seem abstract but for those us working during the early 1980’s, you can recall the hopelessness of that recession and the worry about how can we lift ourselves out of that economic hole.  It turns out that the invention of the microprocessor and its continuous improvement was the seed that grew a multi-trillion dollar industry that has changed the way we work and live forever.  Most of us did not see that coming at the time but IT has created so many job, companies and industries and ways to work smarter, that our economy and world economies boomed later in the 1980’s, 1990’s and most recently during the 21^st century, up until a year ago.

My biggest issue is that I am sensing an upcoming imbalance between the supply and demand for these types of services, whether they’re business process improvement, training, system configuration, tax specialist, change manager and so on.  There is way more expertise out there than companies need to buy even after their massive layoffs.  So we drop our rates and fees but eventually can’t continue on that way.  Consider the recent graduates from universities both undergraduate and graduate level who can’t find work in their fields.  Many cannot even find free internships.  Consider many retirees trying to get back into the workforce because of lost 401K and other parts of their nest egg; or the need to help support their unemployed high consuming adult children and their families.  And consider that tens of thousands of middle and top management experts and professionals recently let go looking to maintain their life style, let alone the upcoming class of 2009.

I’m trying to think ahead to anticipate how I might fit into this new economic grid and while I see several possibilities, they don’t have the glue to stick and sustain me for very long.  I know I’m not alone just among my own circle of direct contacts.  How much can we reinvent ourselves to find a place in what will be tomorrow?  As President Obama said in his Inaugural address, “Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed.  Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”  I wonder…are our goods and services no less needed?  And after we dust ourselves off and remake America, what will that look like?

Now (Oct. 2014) , more than five years after posting this blog, I have reinvented myself (more than once) and am now working at SAP.  In a post I read, SAP refers to the next revolution as machine to machine communication and the internet of things.  http://scn.sap.com/community/business-trends/blog/2014/08/21/how-will-the-4th-industrial-revolution-affect-your-business

I’m not sure what the “big bang” event is that initiated this technology but it is happening at a faster and faster rate and is also harder for us to feel and comprehend the impact.  It’s difficult to put into perspective whether this is just an extension of the fifth revolution in the table above, “The Age of Information and Telecommunications”, or if this is transformational enough on its own to change our everyday lives.  At the same time, the green revolution is growing in the US and globally changing both industry and consumers lives and that has only just begun.  I read recently that there are over 1,000 electric car charging stations in New York State.  That number may seem laughingly small a few years from now, it’s huge compared to just a few years ago.

Tags: behavior, ecomony, green, IT, jobs, recession, SAP, technology