Two great, and very timely, articles out recently that I wanted to comment on. They hit very close to home to many of my clients who are trying to forge new strategies for the current economic downturn. Many feel that we are starting to see some up ticks and bright spots in both consumer and commercial business. Other still have their sad hats on. Today, the word is mostly keep you sad hats on – it’s looks like a long slog back.
In Business Week, The New Abnormal, a cover story by Devin Leonard – we get a picture of America as a place where we are broke and depressed. We are also still drinking our lattes and buying iPads and iPhones like hot bread at a bakery. What gives?
What gives is that our current economic downturn is unlike any other I have experienced over the last 40 years. We have gotten hooked on our new ‘tools’ (iPhones and such) and are not likely to give them up; in fact, we need to have the newest and fastest. At the same time many are cutting back and scaling down on items like toothpaste, shampoo and other sundries that make us feel like we are making ‘sacrifices.’ As Leonard states it – “There it is: gloom, muted optimism, and wild abandon.” I see it in my friends and business associates, and I see it in myself.
The problem is that our economy is based on consumption, and one of the places we are cutting back is our overall spending rate. In the past we were exhorted to go shopping to help the economy – that’s not working now, and individuals and businesses alike are not spending –they are actually saving. Good for them in the long term, but bad for us in the short term.
In The New Times, The Growth Imperative by columnist David Brooks – we have another journalistic home run. Brooks outlines many of the same facts. “Consumers are overindebted, and it will take years of curtailed spending before households are back on a sustainable path. Federal and state governments also will have to pull back. Labor markets were ill before the recession and are worse now.” As I said earlier – nothing like I’ve seen before. As an ad man my job was to get people spending – not so easy now.
Brooks highlights some approaches that could lead us out of things – from both the left and the right. A number of great arguments have been offered on both sides. What I focused on is that there is no easy way out. As a people we tend to look for the easy way, one we can sell to the most people. The problem is that people aren’t buying now – they are sad, angry, and yes, schizophrenic. When this happens people do nothing – and that is what we have now, and will until the time we get our courage back. A turn around is not just around the corner. The long slog is on – plan to use it to your benefit. When it rains sell raincoats.
I’m not a pessimistic guy, but I have learned to read the ‘tea leaves.’ Plan now for the long term solutions that will really have an impact on the future of your business and your career. Build your infrastructure and get ready for good times that will inevitably come down the road. Housing has been a strong engine where I live and news just came out the a large home builder was buying land – and planned to build 4 years from now. Now that’s a smart move. Check out both of the articles I quoted – both have great insights that you can use today to build your plans for tomorrow.