Ok, the worst is behind us! That is what the overwhelming majority of economists now say about the recession. Most key indicators have turned upward from their lows, France and Germany just reported that their economies actually experienced growth in the second quarter and US exports are increasing, meaning other nations are feeling some recovery and buying again. On top of that, the Dow Jones Industrial Average has increased by 43% from its March 9, 2009 low point and is up 6.6% from where it started on January 2, 2009. Even home sales are picking up in many markets.
Consumer confidence is still lagging and, yes, we still have unemployment hovering just below 10%. But keep in mind that there is no such thing as zero unemployment. In fact, from 1996 – 2007 the average annual unemployment rate in the United States was 4.9% (and the lowest rate in the last 30 years was 4.0% in 2000). There are always millions of Americans who are unemployed for one reason or another. This matters because it means that in order to get back to “normal” we don’t need 10% of the population to find a new job – only 5% need to find a job to return us to the recent historic unemployment average. That is no consolation if you have lost your job and, historically, job growth lags the overall recovery but it does help to put the 10% number in perspective.
But the point here is – the worst is behind us – dare I say the recession is over (though the economists won’t officially name the date that it “ended” until sometime next year) and recovery is beginning. It is time for us to climb out of our collective funk, get comfortable with the New Normal and get on with our plans.
What is this “New Normal?” Well, most agree that for a variety of reasons (lessons learned, national debt, tighter credit, etc., etc.) we are not likely to see 4% or 5% annual growth rates in our economy as we climb out of this recession – 2% or maybe 3% are more likely. And, because job creation comes toward the end of a recovery, we are likely to maintain higher than average unemployment rates for some time. But we are seeing growth in the economy, gains in the wealth we hold in the stock market and a stabilization of unemployment rates. So, moderate growth and stability are the New Normal.
With the worst behind us and better days ahead it is time for all of us to dust off those growth plans that were shelved late last year (or earlier for some) and begin moving forward again. It may take longer in the New Normal, but it can still be done.