Recession's Aftershocks Continue
Insurance Experts' Forum, September 29, 2010
I received quite a bit of pushback on my recent blog, “The Great Recession Is Over: Now What,” based on the National Bureau of Economic Research's pronouncement that the recession technically ended in June 2009.
Of course, many did not feel any kind of a lift last year, and a lot of pain continues to be felt.
One reader said “we're in a depression, not a recession.” Another said: “I'll consider the 'Great Recession' over when unemployment is under 5% and over half a million jobs have been created. Until then, its a fool's game to pretend otherwise.”
My blogging colleague, Ara Trembly, expresses just as much skepticism of the NBER's pronouncement, posting a piece titled “Pronouncements of Recession’s End Rival Disney’s Fantasies for Believability.”
Don't jump into the economy full steam quite yet, Ara warns: “It’s a bit like putting your exquisite glass collection back on the shelf when the earthquake tremors have subsided, little realizing that the whole thing may be wiped out later by aftershocks.”
Points well taken, and there's no denying that we need to generate more jobs and opportunities, and get things on a more solid footing. Ten percent unemployment (probably closer to 20% if you count underemployed and discourage workers) is unacceptable. Economic growth needs to be our No. 1 priority, especially among political leaders.
But before we go any further, consider what Time Magazine had to say about our economic malaise:
“Why are Americans so gloomy, fearful and even panicked about the current economic slump? ... The slump is the longest, if not the deepest, since the Great Depression. Traumatized by layoffs that have cost more than 1.2 million jobs during the slump, US. consumers have fallen into their deepest funk in years ... The D word becomes more valid, especially with a small d, when it is used to compare the growth rate of the 1930s, which averaged 0.5% a year, with the expected sluggishness of the next decade, which some economists predict will see an average growth rate of 2% ...
“The deeper tremors emanate from the kind of change that occurs only once every few decades. America is going through a historic transition from a heedless borrow-and-spend society to one that stresses savings and investment. When this recession is over, America will not simply go back to business as usual. The underlying change in the way American consumers and business leaders think about saving and spending will make the recovery one of the slowest in history and the next decade one of lowered expectations.”
This Time Magazine editorial was actually published on Jan. 13, 1992—on the eve of one of the greatest periods of expansion that raised—not lowered—economic expectations, the 1990s. (Also, almost a year after the NBER declared the 1990-91 recession to have ended, March 1991.)
This is not meant to diminish the pain that is out there now—I've personally suffered my share through downturns—but the message is we bounce back, sometimes very strongly, in ways difficult to anticipate or imagine when things still seem dark. No one in 1992 could foresee the Internet and dot-com boom, which would start within the next couple of years, and the way it would reshape the trajectory of our businesses.
In my next post, I will explore how the current economic downturn may be laying the roots for economic growth over the coming decade, and the role of enterprise IT in driving it. And yes, Time Magazine continues to be right about what we can expect in the 2010s: we will not simply go back to business as usual.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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