In a analysis in the latest issue of Newsweek, Rana Foroohar speculates that the recent economic tsunami will result in the up-and-coming generation of young people being more risk-averse, much akin to the generation that came of age during the Great Depression of the 1930s:
Why? Because we are entering an era of diminished expectations and fewer choices, Foroohar claims, backing up the assertion with some research data:
“Unemployment and the specter of instability it creates will really shape the behavior of Generation Recession. A weaker dollar will make all Americans feel poorer by raising the cost of goods, but the young generation graduating and going to work now may actually end up poorer in real terms. Unemployment among 20- to 24-year-olds in the U.S. is more than 15 percent, compared with the nationwide average of 10 percent, and statistics show that for every percentage point in higher unemployment, new graduates take a 6 percent pay cut—an effect that lasts for decades. Skills loss could be a huge issue, too, especially because the average duration of unemployment has increased. Although wages in the U.S. have been relatively flat since the 1970s, Generation Recession may be the first in 30 years to see theirs actually fall.”
“Generation Recession”? Give me a break. Why don’t we call every generation “Generation Recession,” then? Let’s look back at the words of Newsweek’s arch-rival and doppelganger, Time Magazine, as stated in an editorial on January 13, 1992:
“‘Whining’ hardly captures the extent of the gloom Americans feel as the current downturn enters its 18th month. The slump is the longest, if not the deepest, since the Great Depression. Traumatized by layoffs that have cost more than 1.2 million jobs during the slump, U.S. consumers have fallen into their deepest funk in years…. In one of history’s most painful paradoxes, U.S. consumers seem suddenly disillusioned with the American Dream of rising prosperity even as capitalism and democracy have consigned the Soviet Union to history’s trash heap. ‘I’m worried if my kids can earn a decent living and buy a house,’ says Tony Lentini, vice president of public affairs for Mitchell Energy in Houston. ‘I wonder if this will be the first generation that didn’t do better than their parents. There’s a genuine feeling that the country has gotten way off track, and neither political party has any answers. Americans don’t see any solutions.’”
You get the picture. The 1990-92 Great Recession had a lot of people really depressed. We had reached depths never seen before, and the future was bleak. But perhaps the worse recession in our generation occurred between the years 1974 and 1975, followed by another between 1980 and 1982. This was followed by the 1980s boom. Likewise, on the heels of the 1990-92 downturn, we had one of the most unprecedented periods of wealth creation in our history. And all in all, the early 2000s, while they had some major issues, weren’t too shabby from an economic perspective.
In the aftermath of the 1970s oil shocks and Great Recession, we were incessantly told that we entered an “era of diminished expectations.” Ditto for the Great Recession of the early 1980s, ditto for the Great Recession of the early 1990s. During each down cycle, it was ballyhooed as the worst of the worst, something from which we would never recover. Yet each period was followed by periods of incredible growth. As I’ve noted in previous posts, every downturn has shaken up the old order and created new patterns. The PC revolution emerged from the recession of 1980-1982; the Internet revolution from the recession of 1990-1991; and social media arose from the 2000-2002 post-dot-bomb recession. Given our past history, we may be on the verge of an economic boom based on factors we can’t even describe yet.
And what about those downtrodden youngsters whose worldview has been suppressed by cold economic realities? Sure, it’s harder for them to find jobs right now. And we’re going to see plenty of more articles like the Newsweek piece about the bleak future ahead for younger generations.
But the fact is, we actually have a young generation entering an era of unprecedented opportunity — and they know it. They connect to each other across the globe in ways unimaginable even to their older siblings — via social networking, accessing information and contacts via smartphones and other devices. When it comes to the power of information sharing and technology, they know no limits. And therein lies the roots of the next wave of opportunity.
