Bloomberg Businessweek's August 2nd edition has an article about "The New Abnormal" economic climate. It talks about Americans who are cutting back on some things, but splurging on others. During a time of nearly 10% unemployment and foggy economic uncertainty, many people simply don't know what to do. People worry about losing their jobs and about not being able to pay the electric bill. Others are cutting back for that just-in-case situation, while some are cutting back in areas so that they can continue to spend in other areas. The Dow hits extreme highs and extreme lows. Economists can't seem to agree on the outlook in the short term or the long term. News outlets are so politicized that the average person can't tell the difference between the truth or variations of the truth. Instead, they blindly rely on MSNBC and Fox News to set them straight. Record numbers of people are out of work and the news media focuses more on the 10% unemployed than the 90% still employed. Train wrecks make the news. That's just the way it is. Now, the country is waiting and hoping that things will soon turn around, and they will turn around, but everyone is going to have to adapt and adjust.
Businesses that have down-sized are not going to just instantly increase staffing numbers because the economy turns around. Instead, they are going to try as much as they can to get more efficient and need less people. They are going to get more efficient in every area possible. At the same time, people will need to adjust and adapt to their situations. When we get a raise or a promotion, we tend to adjust our lifestyles up. Well, this will be necessary too when we need to adjust down due to pay cuts, demotions, lay offs, and terminations. Everyone is going to have to adjust and everything is going to be uncertain for a long time to come. It's not economic schizophrenia. It's just shock and adjustment, but it's going to be OK.
This is an opportunity to teach young people to be smarter with their money. Teach high school kids financial and entrepreneurial skills. Mandate finance classes for all college students - not just literature, algebra, govenerment, etc. Make extern programs mandatory for all college degrees. This is very successful in the healthcare fields. It's free labor for business and on-the-job training for students. Teach business ethics to young people today to prevent Enron and Worldcom tomorrow. Teach people how to make personal budgets and avoid future credit crunches.
This is an opportunity. We need to make the best of it.