I found it very interesting that against the backdrop of recent hard times there was an attitude that it will be turning around soon. No one was doing back flips about prospects for the next few months, but the trend is up and expectations for recovery were generally optimistic. Were we all drinking too much, or is this optimism warranted?
Let’s look at some issues that are part observation and some facts that may back them up. Federal Reserve Chairman Alan Greenspan recently paid tribute to the “remarkable resilience” of the U.S. economy and said indications were that a “fairly marked turnaround” was on the way.
The world-shattering events of the past few years (the 9/11 terror attacks, the bursting of the stock-market bubble and corporate accounting scandals) would have meant a serious recession 30 or 40 years ago, Greenspan said. But years of deregulation and the flexibility learned from the pressures of global competition have made U.S. businesses and the economy more resilient than at any time in history.
He said, “I expect the growth rate to quicken in the United States. Maybe not as rapidly as some of the forecasts for the third quarter imply, but ... everything seems to be in place.”
Greenspan pointed to recent gains in productivity as support for economists’ predictions that the economy would see an upswing in the third quarter.
Tax authorities have instructed employers to start reducing the amount of federal income tax withheld from workers’ paychecks by July 1, so some employees will see larger checks.
Meanwhile, at a meeting of world leaders in France, the world’s top industrialized powers pledged to boost growth in their economies. While they were confronting “many challenges, major downside risks have receded and the conditions for a recovery are in place. We are confident in the growth potential of our economies,” they said in a statement.
In a recent article, Christopher Kenton correctly points out that through the years we have alternately experimented with regulation to guide business and deregulation to stimulate business. Corresponding with these alternative policies is that we have relative stability without much growth, or opportunities for wild growth with relative instability. When we choose deregulation we are opening ourselves up for fantastic potential for economic growth and equally dangerous downturns. But we seem to like the roller-coaster ride of deregulation more than the stability that usually comes with heavier regulation.
So in a sense, we chose this situation and it seems that now is the time to choose to take advantage of opportunities for progress. Marketing is one of the first business sectors to suffer in a downturn. But when businesses sense that the worst is over, they start investing in marketing again. In the last three months, there has been a growing interest in marketing programs. Kenton says this doesn’t necessarily mean a recovery is around the corner, but it does mean that opportunities are beginning to open up. He said, “For the first time in 18 months, I’m considering once again the prospects of growth.”