"summer's gone" - Wake up Boo, The Boo Radleys
Well we are into September, and the future is not looking so bright we have to wear shades (Timbuk 3). A long winter and probably a long few years are to come. Figures in the news today suggest a 10% drop in real incomes over this year and next for UK households, some £3000 on average. We shall be no better off than we were in 2003, despite high employment/low unemployment.
That money has to come from somewhere - and that means first of all from discretionary spend. That new sofa, car, holiday, wallpaper - if it can be put off it will be. Which means a hit to the retail and service sectors, followed by the manufacturing sector (or possibly lead by it).
My kids recently turned 20 and hopefully by the time they fully enter the workplace things will be better. But it got me thinking.
My kids are really just becoming aware of the economy and business, so lets say that most of us really understand that when we have been working for a while, say when we are 25. (I didn't even start work until I was nearly 26 - perpetual student!).
Assuming this current crisis can be resolved in about 5 years (it will be more than one) then we are talking 2027. That is 20 years after the global financial crisis of 2007/8.
So, in 2007 people who were 25 might be aware of good times coming to an end, and then start to experience austerity, Brexit, covid, the 2022 cost of living crisis... By 2027 they will be 45 and be able to remember one or two good years for the economy a long time ago. Anyone under 45 will never have known anything but tough times.
Of course us oldsters will be telling our war stories about the times of plenty. And be rightly ignored.
We talk of recovery as a part of the business cycle, but realistically we have to be in boom before people feel recovery has happened, and those breathing spaces have been short recently.
We all know our early experiences in business have an influence on how we behave in our careers. What will it mean for them?
45 year old should be the engines of business - a combination of energy and experience. They will have known nothing but recession and depression. Will they be able to imagine a better future? Will their formative years set them on a path of limited risk?
The impact of these years will be not just economic, but psychological (which will also impact on the economy).
What will it do to business thinking and strategy?
I've no idea, but we ought to start thinking about getting young people to have the right mindset.
It would probably help if we stopped telling them they could buy a house if they gave up eating avocado toast (is that really a thing?) and recognised they are our future. And they will pay our pensions. I hope they have a booming economy to help them do so.
Anyway, have a good weekend. Sorry if I am being gloomy.
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