The long economic road ahead

Recent conversations with clients, associates, and friends have been dominated by concerns about the economy, financial markets, and what to do about one’s investments. There are lots of questions but few answers.

But two notions seem clear:

1. We are in uncharted territory, and
2. The world will not soon return to the days of yesteryear.

Uncharted territory – Comparisons to the Great Depression or the stagflation of the 1970’s are rampant. And while we will likely see some combination of high unemployment, sluggish economic growth, and inflation, today’s world is a different place. The problems are different and the solutions are unknown. We will see a lot of trial and error government-driven solutions with great costs and little effect.

Yesteryear is gone forever – If the crisis is different and the solutions are as yet unknown, then it seems reasonable that we will not soon, if ever, return to a pre-crash world. Financial markets will likely struggle for years, and housing values in some markets will never return to their previous peaks. It’s as if someone somewhere has hit the reset button; and there is no “undo” function.

What do you do now? Here are a few thoughts:

• Accept that the reset button has been pushed – denial of the new reality is the largest barrier to moving forward.

• Take stock of your business or personal situation – a realistic appraisal will help to clarify the available options.

• Look for opportunities – Even if unemployment reaches 10%, 90% of the people are still working. Opportunities lie all around us if we are open to them.