So what might it all mean for 2009? Here are some quick, short-term possibilities:
- As of January 28, 2009, the DJIA was down 37% from its December 2007 level. This compares with Euro Area (FTSE), down 55%; Britain (FTSE 100), 54%; China (SSEA), down 60%; India (BSE), down 63%; and Russia (RTS), down 76%. Due to the reputation of the U.S. and its relative market stability, international investors will flock to the U.S. stock market in 2009.
- Once Congress passes a stimulus package President Obama can sign, investors will come back in full force to “grab bargains” while they still can. I can already hear investors lamenting and complaining about how much money they could have made if…. By midyear consumer confidence will be on the upswing, although lower than the recent past.
- The dire predictions of unemployment rates of 10% or higher in 2009 will not materialize due to increased enrollment in higher education, depletion of manufacturing inventory and increased infrastructure spending.
- New housing starts will remain low/nonexistent in 2009, but governmental intervention will start to clear up the excess inventory. This will stabilize the housing markets, but new housing starts will remain depressed until 2012. Employees in the construction industry will need to either move into remodeling/repair work or obtain new skills.
- To assist with rising tuition costs and other political/social/economic issues, immigration reform will pass in the second half of 2009. This will bring additional dollars to the university systems (foreign students typically pay full tuition), increase tax revenues (through lawful employment) and increase investment in research and development (due to an influx of technology workers).
- This recession could also foster conditions that will alleviate other business concerns. Regarding education and skills, an area that American business leaders have been criticizing, there is a marked uptick in applications for public four-year institutions, graduate schools and business schools. Although tuition prices are up, a down economy lowers students’ field of opportunity and justifies the costs of investing in higher education. It also (it is hoped) encourages high school students to stay in school and/or pursue vocational training. Diminished retirement savings will also keep a check on the imminent exodus of Baby Boomers from the workforce, forestalling the predicted skills shortage during the coming decade.
- Oh, and after 101 years, the Cubs finally win a World Series.
Editor’s Note: Maternity leave waits for no man … or woman … per “The Great Unknown … Life with a Baby” blog post, the author‘s baby was born in December, five weeks early, and delayed the publication of Part 2 of this blog.