Wednesday, July 23, 2008

These are the good old days...

Interesting commentary from Jeff Jacoby in yesterday's Boston Globe (click here). Goes back to the adage of whether you consider the glass half full or empty, or just another thing to wash!

There are a lot of comparisons in the media of today's economic conditions to the inflationary 1970s and even the Great Depression and the 1930s (see shaded areas below). The chart below shows the annual Misery Index from 1930 to 2008, calculated as the sum of a) the CPI inflation rate and b) the unemployment rate.

Notice that today's single-digit Misery Index of 9.7% isn't anywhere near to the double-digit levels throughout both the 1930s and the 1970s, with peaks around 20% in both decades. The Misery Index is also lower today than during most of the 1980s.

Not to dismiss the current economic contraction, but a long-term perspective on the part of green industry managers is needed. This is the 11th "recessionary" time period over the last 60 years. My point -- it is not the first, nor will it be the last -- on average they occur every 6 years.

We could even go so far to say they are a part of normal business cycles. A clear-minded, deterministic, strategically visionary mindset will probably be the only thing separating those who survive and those who don't. Stay tuned to future posts on specific strategies to compete in a down economy!

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