10 ways the new economy will look different
From the rise of the tightwad to the decline of the Sun Belt, American values and industries will be reinvented as the nation comes out of the worst recession since the 1930s.
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"You can get some of that normal bounce-back that you'd get from a severe recession even in the situation that we're starting from," she said at a recent appearance at the Brookings Institution. "There is a kind of a historical pattern – the biggest postwar recessions had the biggest GDP growth in the quarters following those recessions."Skip to next paragraph
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5 THE NEW BIG THREE
Crises can accelerate trends that were already remaking a nation's economic order. The Panic of 1873, for instance, helped propel the US into the modern Industrial Age. This recession is likely to be no different. If nothing else, it may help the rise of three sectors likely to be big job producers in the future: government, healthcare, and education.
At this point, we should take a moment to mourn the state of the old Big Three. The traditional Detroit-based US auto firms appear to have reached a turning point in their storied history.
GM, Ford, and Chrysler put the world on wheels, and in the dark hour of World War II served as democracy's arsenal. But that was then. After the current recession passes, there may not be three of them. In relative terms, they won't all be big.
"The three Detroit automakers have the possibility of becoming competitive and profitable firms. But ... they will be a fraction of their former size," says Harley Shaiken, a labor expert at the University of California, Berkeley.
By contrast, government employment has continued to rise throughout the downturn. So have jobs in healthcare and education, which remain perhaps the two strongest US economic sectors. "This suggests a change in the composition of the job market and economy," writes John Silvia, chief economist of the Wachovia Economics Group, in a recent analysis.
6 THE MOVABLE RÉSUMÉ
Millions of Americans will be rehired in the coming new economy. Some day – though it might take a few years – unemployment will drop back to around 5 percent, the level at which economists generally judge that the US is fully back to work.
But even then, labor markets will remain volatile. Job insecurity has been rising for years, and that's a trend that may become more pronounced even as prosperity returns.
"People will continue to have a very different relationship to the work force," says Mr. Shaiken. "It will be a far more fluid labor market."
One reason is that layoffs have become a more common management tool. Companies now will cut staff in anticipation of a possible glitch in cash flow, as opposed to after things begin to get tight.
The other is that we may see a new age of employees moving in and out of jobs due to personal circumstances. Tighter credit and hammered asset values mean it's likely to be harder for students to pay for college; they may need to take intermittent semesters off and work full time to make ends meet.