Recovering the Future (Part 1)

Is this the multi-tasking recovery?

GDP has passed its pre-recession high. Corporate profitability has never been stronger. Balance sheets are healthy and interest rates are low. So why does this recovery feel so lousy?

It feels lousy because of jobs. Back in the ‘90s, the joke went something like: “Did you hear that the economy created 300 thousand jobs last month?” “Yeah, and I’m working three of them.” The idea was that the jobs created by the recovery were substandard and didn’t provide enough income. We called that the “jobless recovery.”

The dynamic is different, now. Those of us working seem to be doing the work of three people. The technology of cell phones and laptops and global connectivity has expanded the workplace’s reach to every corner of our lives. As a result, we’re more productive and our employers don’t need as many workers. So their profits are better– much better.

Thus, while our pay hasn’t gone up much, our workloads have. And companies see little need to add staff, because high unemployment has depressed consumer demand. Also business investment is low because record productivity makes capital improvements seem unnecessary.

How does economy get out of this funk? Most economists see the recovery grinding away while unemployment gradually fall. That’s the “New Normal” that some bond guys from California keep talking about: a dismal, grey sky of diminished expectations. Blah.

Is there another way out? Sure, but it means working smarter, not harder.

Douglas R. Tengdin, CFA
Chief Investment Officer
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