Even though it feels long ago and far away, the boom economy is still memorable. Despite overvalued dot-coms, looming telecom woes and antitrust squabbles, the economy of a few years ago was also rich in ready cash, stock options and jobs, jobs, jobs.
In comparison, today’s economy is not pretty. Instead of endless flexibility and nonstop prosperity, workers are facing lower salaries and an outflow of jobs to countries that can afford to employ highly skilled workers at relatively low wages.
Is this not-so-pleasant New Economy here to stay, or is it, like its go-go predecessor, merely a passing shadow?
Many factors have contributed to the economy’s current condition, including dot-com flameouts, the 9/11 terrorist attacks and the ensuing war in Iraq.
These and other major events have hammered the economy into a new form that is not exactly beautiful. Despite these low points, however, Prudential Securities market analyst Larry Wachtel told the E-Commerce Times that what is happening now is merely part of the ebb and flow of every economic period.
“There was a major decline over a three-year period,” he said. “That was the bubble. Really, it was a correction.”
Those who are currently unemployed probably would like that correction to mean a return to a strong employment climate. However, the ramifications of the bubble’s dissipation are that the harsher, leaner “new economy” will prevail for at least a little while longer.
Although it may feel as if this economic downturn will linger for good, analysts say it is important to remember that like the seasons, everything has a cycle.
“I wish I saw a bright spot six months down the road, but at least I can say that there will definitely be a recovery,” said Ari Axelrod, corporate development manager at Boston Consulting Group.
He told the E-Commerce Times that although the outlook right now is not rosy, that does not mean the current situation is permanent.
“This is just a period of slowdown, and it looks especially bad if you compare it to what we had in 1999 and 2000,” Axelrod added. “But this economy won’t last forever simply because of human behavior. People buy houses and cars, they develop new technology, and all of that makes for a better economy.”
However, unlike the dot-com economy, which died an ignominious and relatively swift death, the economic climate today will not reverse course suddenly. Rather, the recovery will be slow and gradual, replacing the current malaise with steadily better conditions.
No Rose-Colored Glasses
The knowledge that a sudden spike in the economy is unlikely may be disheartening, but as Forrester analyst Andrew Bartels told the E-Commerce Times, people should be realistic.
Adapting to today’s economic climate requires a sense of consciousness about the different factors that are preventing a complete rebound.
Among the barriers to a bounceback, Bartels mentioned the high-tech bubble hangover, a decline in PC purchasing, the ongoing occupation of Iraq, growth in Asia and the weak dollar.
“There are many reasons things are the way they are,” he said. “People need to understand that when we talk about the ‘economy,’ there are really a number of complex elements at play.”
He added, “Understanding what’s happening makes it easier to be realistic about how long it will be until there’s a strong recovery.”
However, understanding why the economy’s performance is less than stellar may be little comfort to workers who are trapped in unemployment, underemployment or overwork. Fortunately, there are a few strategies that might provide some comfort.
Beyond fostering a deeply realistic viewpoint, people should be finding new ways to be productive without burning out, according to Wachtel.
“In order to live and compete in this economy,” he said, “[you have] to maintain a fairly high level of productivity. You’re bucking up against a capacity problem, but that’s the situation we’re in.”
Flight to Education
As in any economic bust, education can be a refuge. Training and formal studies are popular these days as more people find shelter behind ivy-covered walls.
Neill Hopkins, CompTIA’s vice president of workforce development and training, told the E-Commerce Times that because the job market has changed so significantly in the past three years, more IT staffers are trying to broaden their skill set.
“In this economy, you need to have a range of skills, and not just in technology,” he said. “We’re seeing a huge interest in soft skills as well, like team building. People that get certifications now are looking at moving into management in a few years.”
As sweet as it would be for the economy to rocket back to the days of peace and prosperity, that likely is not a realistic expectation. Still, as people hunker down to wait out the storm, hope remains that a gradual recovery will make the latest new economy obsolete.