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At the end of the last decade, many of us were girding for the possible ramifications of the infamous Y2K. The turning
of the millennium was expected to cause computers worldwide to flip their lids.
As it turned out, those fears were
much ado about nothing.
This year, it’s a mere turning of the decade and, to be honest, I hadn’t given
it any thought until I began seeing all the “best and worst of the decade” features in the media.
The
good news is that we have no comparable computer scare to occupy our collective conscience as we cross the threshold of another
new year and decade.
The better news is that the 2008-2009 recession is “officially” over; at least
that’s the consensus of economists throughout the world. What still appears to be up for debate is when we begin a substantive,
enduring recovery, and just how robust it will be.
If you look at recent history, we appear to have economic ills
regularly whenever a decade turns. You’ll recall the 1990-1991 recession and the 2001-2002 recession, which really began
when the Fed started increasing rates in 2000.
Both those downturns were shorter than the one that just ended,
and the recoveries that ensued were quite strong, in spite of the fact that the 9/11 terrorist attacks shook the nation and
the world to its foundation.
Today, there appears to be room for optimism. The gross domestic product increased
in the third quarter of 2009; housing prices bottomed out and have begun to creep up in some markets; the unemployment rate
fell; and the stock market has rallied from its March low.
But many argue that those “improvements”
were basically the result of short-term “fixes” that won’t be repeated, i.e., things like the cash-for-clunkers
program and the first-time homebuyers’ credit, and the persistence of the Fed to keep interest rates low.
Personally,
I think the recovery hinges on the psyche of the consumer, i.e., you and me, and when we start spending and investing again
at normal levels. Consumer spending accounts for about 70 percent of U.S. economic activity.
But we’ve got
to feel comfortable with our lot in life and secure about our financial situation before we start laying out a lot of green,
and that’s difficult for a lot of people these days.
Many folks have lost their jobs and a good chunk of
their wealth, at least compared with when the market was above 14,000. These factors, combined with the fact that savings
rates are going up, mean people will be reticent to spend for a while.
But adding a little to the optimistic side
of this equation, the New York-based Conference Board recently reported that consumer confidence rose again in December to
52.9, from 50.6 in November.
That increase is good, but still a far cry from a reading of 90—the number that
would signify what is termed a “solid economy.”
So here we are.
This time last year, I
wrote that the economy “will provide us significant challenges” in 2009, and that the year had “the potential
of generating new highs on our personal stress-o-meters.” What understatements!
Multiple challenges remain,
no doubt. But I feel a whole lot better about our prospects than I did a year ago at this time.
The beginning of
a new year is always a good time to recommit to working hard and redoubling our efforts. At least the way it looks now, those
efforts should be rewarded significantly more in 2010 than they were for most of us in 2009.
If you made it through
last year intact, you’ve got a lot to be proud of. We wish you greater success and more prosperity in 2010. •
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Katterjohn is publisher of IBJ. To comment on this column, send e-mail to ckatterjohn@ibj.com.
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