This is the first real recession for many of us. Some are dealing with the uncertainties by crying foul and uploading blames to all the wrong sources, others are blithely unaware of the seismic shifts taking place right under our noses. Which ones of those trends are long-lasting, and which are merely temporary?
Flirting with frugality
For months, the media has been obsessive in its coverage of America’s new favourite past-time: extreme frugality. It’s one thing to have a subculture of cheapskates planning to save another ten bucks a week in some dark corner of the blogosphere (I know because I am one of those). But it’s entirely another matter to have the Wall Street Journal persuading me from buying a bottle of Evian, so I can save a buck.
With countless individuals and families dealing with foreclosure, many grappling with unemployment, and the millions suffering in silence from a vast amount of their wealth wiped out from a drop in housing prices and stock portfolios, some say that a focus on savings may not be an entirely terrible pursuit.
Certainly, if you are head over heels in debt, and threatened by lay-offs and a drastic change in income, then lifestyle changes must follow. Some consumers are so shell-shocked over the drastic drop in their perceived wealth that they may never recover to join the consumerist party again.
Indeed, America may move away from its previously rampantly materialistic culture of years past to become a more moderate consumerist group. On second thought, I’m not sure I can even believe that. The American Dream of rags to riches will not die. The passionate measures that some Americans have taken to protect and preserve their wealth (of which frugality is a tactic) can only accentuates, instead of diminishing the very American practice of linking success to material possessions. The pursuit of wealth and subsequent accumulation of wealth may be temporarily halted, but centuries of ideals and beliefs do not get erased from the collective psyche just like that.
So to foretell a future peppered with penny-pinching and miser American population is unrealistic. Those trends come in waves. A period of tightening must be followed with a period of letting lose. Once the feelings of desperation become distant memories, debt levels abate, and investment portfolios recuperate to a bearable level, Americans have little reasons to hold back.
The one exception I see in this case is a particular group of baby boomers that are neither nearing retirement, or have already retired. In their cases, massive losses of retirement savings are next to impossible to recover, leading to the next two permanent trends in both the job market and the recreational/travel industries.
Baby boomers holding the fort
If you are a baby boomer nearing retirement, but suddenly finding your nest egg much smaller than you had anticipated, and the value of your number one asset – your property, dropping more than you ever thought possible, what would you do? Instead of sailing into the sunset, you’d probably stick around for a while longer.
It is sad that some members of my parents’ generation cannot proceed according to schedule to enjoy his or her golden years. But the overall ramifications for the wider society might not be all bad. Just a couple of years ago, sociologists and demographers were bemoaning the imminent shortage of workers as waves of baby boomers leave the workforce. This recession has tamed that tide for the time being.
The temporary pause in the mass exodus of medical professionals, and those in the teaching profession, has no doubt allowed alleviated some anxieties. A more measured departure in those seasoned workers may also allow more hand-holding for those taking over the torch. The young ones may want more responsibilities all at once. But from the look of the ongoing debacles, were we really prepared to face it alone?
Business catered to baby boomers: outlook down
During the past few decades, business developers had all but worked themselves into a frenzy to meet the demand from the flood of baby boomers going into retirement. They were supposed to live out their remaining years in beach properties, complete with sun and fun. That meant high-end cruises all around the world, and lots and lots of golf.
Many may still go on to live out this pretty picture. But for the many that had entrusted their retirement portfolio to the wisdom of the buy-and-hold long-term philosophy, the plan is coming up empty. It may take a while yet to see the long-term fallout of such a devastating destruction of wealth for a segment of the population that may never recover. Therefore, those recreational and travel industries catered solely to the baby boomers may want to make slight adjustments to their previously water-tight business models.
Of all the age and demographic groups, I doubt any had suffered a loss as irreparable as the boomers. Knowing this, I find whines and whimpers from the younger generations ignorant and narcissistic. The X and Ys still have many years to build up their damaged portfolios or repair their damaged credit ratings. Because of our later starting points, we should be thankful that a crisis this scale happened this early in our lives and careers. Our career trajectory may be stunted in the short term, but this is hardly an insurmountable barrier.
Alternative career options open up for the young
For the last few decades, banking and finance was king. It still is, in some ways. But the overwhelming pull of the banking industry has undoubtedly waned. Demand for junior bankers are down, and what a favour they are doing for the many burgeoning industries desperately in need of talent!
To some, this is nothing short of emancipation. Previously bound to the competition for the highest post-graduate signing bonuses and compensation packages, many are seeking riches, glory, and satisfaction elsewhere.
Pitting the effect of this new wave of highly ambitious and competitive youngsters (freshly redirected from the financial field) against the larger number of baby boomers holding on to their reigns for longer than previously expected, will a corporate culture clash or bottleneck emerge? Combined with a renewed corporate conservatism getting ready to cloak the business world, are we going to witness a larger number of younger workers turning away from the system not with protests and efforts to steer changes, but with quitting?
There is no shortage of industries in need of innovation. Alternative energy, bio-technology and pharmaceuticals, medical products and services, network and web technologies, are just some of fields always ready for new ideas. Some old ones need help too, newspapers, anybody? The future is hardly bleak for most of us.
picture source: ~FreakyDarlingx