Monday, August 16, 2010

What Is The New Normal?

Reading an article in the New York Times last week called “But Will It Make You Happy?” struck me as sad, when it should have been uplifting (I think).

Cocooning is nothing new and a return to basics isn’t either. I lived through those phrases during the last recession and look how that turned out. But good on Wal-Mart for finding a way to capitalize on Americans’ desire to stay at home and spend more time with the family. Cha-ching. It seems no matter what the economic climate, most Americans will continue to find fulfillment via way of external sources, i.e., shopping, shopping and shopping. While it’s admirable that people like Tammy Strobel and Logan Smith can downgrade their living needs to just a couple of plates, a cup and a pair of shoes, that is hardly doable for the majority of American families. Besides, where is the balance in that?

And while it’s great to read that “current research suggests, unlike consumption of material goods, spending on leisure and services typically strengthens social bonds, which in turn helps amplify happiness,” will the focus on creating experiences versus the accumulation of material goods continue once the good times roll round again? I am undecided.

Which brings me to the V-shaped economic rebound.

Forbes analysts Brian Wesbury and Robert Stein recently launched a new column. Their prediction, which was released in advance of the official GDP stats last month (read here), told us that we are well on our way to a robust recovery, a V-shaped economic rebound. Their diagnosis included two generally held predictions: that we are bound to slip into another recession, or Depression Part 2, or that the economy is recalibrating to a ‘New Normal’ marked by anemic growth and persistently high unemployment. The latter sounds more like it.

Given that the vast majority of economists and analysts were caught unawares by the global financial meltdown and the severity of the recession that followed, the temptation to avoid the appearance of Pollyannaism at all costs is great. It is hard to argue with the unemployment numbers, which have shown precious little signs of improvement. And it is hard for me to conceive of a robust recovery without a substantial uptick in the number of Americans gaining full-time employment.

I’m no economist, but I think I am seeing more of the New Normal out there than anything else right now.

And then I have to ask myself, what exactly is the New Normal anyway?

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