Three years have passed since the great recession and it seems as though things are simply not improving. With very slight decreases in unemployment and housing prices not really improving, we might starting wondering if perhaps there is more than just a recovery ahead. The stock market goes up and down over 5% in a single month, businesses are hiring and then suddenly are not, and while this disaster may seem like a recovering but fragile economy, we believe it is actually the beginning of a new economic climate.
It sometimes takes years to see the light after such a strong recession and despite economists all over not willing to say it, it doesn’t seem like the light everyone is looking for is going to light up anytime soon. This isn’t a post about another doomsday theory or an explanation as to why the world will never recover type of scenario but rather an honest look into a possibility that no one wants to admit is very likely.
The great years of 2001-2004 are gone and it unlikely that we will ever see those exact days again, not because it is impossible for our economy to grow but rather because the economy we are in now is entirely different from the one we were in then and the dynamics despite being similar, are on an entirely different playing field. So what is this change I keep referring to?
It is a generational change that leads to a different type of economy which is why we are having such a hard time seeing a come back, as there may not actually be one. The reality is we are in a different world than the 2001 era and that the playing field has changed, therefore we are not going to experience what most see as a possible incoming inflation but rather a deflation of values creating a cheaper economy rather than a prosperous one.
More people, less quality, and less experience leads to an economy full of supply with very little demand and that leaves prices going down and devaluing the marketplace as a whole. Think about wheel manufacturers as a good example, in the past 6 months, maybe 7-8 new companies came out all with the same product and same concepts or ideology. Despite all saying they will provide the better product, it will ultimately become a price war to start with. Same goes for all those inexperienced stock traders, they will trade stocks daily with the intention to make a quick buck and as a result de-value the true cost of a stock keeping it from growing. These are all indicators that, we as a society, are keeping our economy down and not because we are doing more or less of something but rather going about it in a different way which is why I call this a generational change, rather than a bad economy.
It is a period of transition and that that is why unemployment is also not getting better, partly because the need of employers is different but also because the real job openings are in different fields than they were and therefore leave those that are searching for their same old job out of work as those markets have changed and there is no longer a need there. Perhaps our country is looking at its president and leadership to fix a problem that isn’t really there and perhaps that is why we end up just disappointed that things are not getting better. At the end of the day the real question remains:
Will we adapt in time to prevent ourselves from losing our position as the economic leaders of the world?
