This Great Recession has fooled everyone, especially economists, in its shape, severity and longevity. The unexpected drop in the US unemployment rate to 9.4% from 9.5% leads me to wonder if the next surprise will be on the upside and that economic growth in the next two quarters may be a lot stronger than expected. Business leaders are already changing their conversation from cost-cutting to growing the top line. Soon they’ll start putting their money behind the talk. The smartest CEOs are already investing more in innovation and the design of new products and services to get ready for the takeoff.
There are a lot of caveats to this rosy scenario. The most important is that this recovery will probably be very different from earlier ones because the US consumer is tapped out. Demand from consumers will be lower than earlier recoveries. Will Chinese and Indian consumers take up the slack? Maybe. Both countries are pulling the global economy out of this recession—for the first time ever. So maybe they will continue.
The real question for the future is what will a GenY economy look like? The Boomer economy of consumerism is being replaced in the US by a Gen Y economy. But what will drive GenY economic growth? What are the values of this generation and what is valuable to it? Companies better start thinking about this. At Parsons, we are creating a GenY Research Lab to dig deeply into the contours of GenY culture and what a GenY Economy will look like. Please send in any ideas on this.