It's official. The US is in recession
Published 10:23, 01 December 08
Moments ago, the NBER announced that the US has been in a recession since December 2007. No surprise, eh? Jack wrote tellingly about it way back then.I know that there are academic reasons to avoid sticking the R-label on the economy before it is time. But, there's value in labels.
Naming something, giving it a label, presents the opportunity for better control. This is well-known in cognitive psychology vis a vis behavioral issues. It is just as true when we collectively face obstacles. Naming the obstacle allows us to converge our efforts in overcoming it. The avoidance of a label only prolongs our ability to surmount difficulties, causing us to debate the merits of our positions and definitions. External affirmation of the recession should focus us on its resolution.
With the endless spin of news and opinion, coupled with the incessant shopping mantra of the holiday season, I needed to get regrounded. I pulled Thomas Sowell's "Basic Economics" off the shelf and reread the opening pages. It's worth reminding ourselves that the economy exists as a framework for the effective use of finite (scarce) resources. If resources were infinite, there would be no need for an economy. Sowell writes:
"It apparently seemed strange somehow that there should be such a thing as scarcity and that this should imply a need for ... personal responsibility in spending. Yet nothing has been more pervasive in the history of the human race than scarcity and all the requirements for economizing that go with scarcity."
This recession — and its related detritus of collapsed companies — is part of a necessary harmonic motion, as painful as it has been and will be for months to come. Our collective denial of scarcity led us to overextension, and the economic engine is reeling us back in.
The recession is now named, we have been in it (along with our global partners) for a year, and it will eventually end. When it is proclaimed "over", our companies, relationships, resources, and opportunities will not look the same as they did prior to its beginning. They cannot. We need to be in the process of reimagining ourselves and our business models in preparation for a post-recession reality.