Economics

David Houle

David Houle is a futurist, thinker and speaker. Houle spent more than 20 years in media and entertainment. He has worked at NBC, CBS and was part of the senior executive team that created and launched MTV, Nickelodeon, VH1 and CNN Headline News.


 

A Depression / A Beginning

05.12.2020

 

The near-term future is catastrophic and depressing. The longer term is potentially transformative and uplifting… if we fully understand the possibilities and needs of this decade. As a futurist, I pride myself on the accuracy of my forecasts. When they have not been pinpoint accurate, they are usually directionally correct. That is my intention here, to be as clear as possible about the collective direction of humanity and the United States.

 

We have entered a Depression.

 

I dislike the terms recession and GDP. They are of the last century and based upon physical capitalism. They simply no longer reflect reality. They are terms meaningless to who we are and where we are going. The word Depression is different. We have only had one and that was called the Great Depression. We now must call it the Great Depression of the 20th Century to contrast with the Great Depression of the 21st Century.  

 

Definition

In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle. Wikipedia

 

 

It is a term we dance around. We fear to say it or write it. Recently there has been such prefatory words as “possible” or “could lead to”. Few are saying that we have entered one. It feels too harsh or negative. Well, here is the unfolding reality.

 

I take the time to lay this out as I have found that a number of people seem unable to accept the fact that we are indeed in a Depression, the first of the 21st Century.

 

Unemployment

 

30+ million newly unemployed in the last few weeks. That is millions more than the amount of total jobs gained in the U.S. since 2009. There were an estimated 130 million full-time jobs as of 2019. 30 million is 23% of that number. We entered 2020 with a 3.5% unemployment rate. So, now we have 26% unemployment. Factor in all the people who are still trying to register for unemployment compensation on overwhelmed state and federal websites, and we are between 26-30% unemployment. Add in the impending lay-offs and we should settle in at 30-35% unemployment by the end of May.

 

The last time there was a number close to this was, yup, the Great Depression of the 20th Century:

 

                           1932           23.6%

                           1933           24.9%

                           1934           21.7%

                           1935           20.1%

                           1936           16.9%

                           1937           14.3%

                           1938           19.0%

                           1939           17.2%

                           1940           14.6%

 

The above are facts and real numbers. Now here are the forecasts

 

GDP

 

Certainly, the GDP of the US will be down double digits in the second quarter and possibly the third quarter as well. Globally, there will be a wide variance of mid-single to mid-double digit decreases. For 2020 versus 2019 the global GDP might average a decline of 8 to10%.

 

Using the economic language of the 20th century, 2020 will be the first year of a global depression with year over year contraction of GDP. There will literally be 100 to 500 million unemployed around the world. By the above definition, I forecast this Depression will last at least through 2022.

 

Now, to the long-term, future facing, upbeat look into the 2020s.

 

 

A Beginning

 

COVID-19, and our global collective experience of it, is the beginning of the decade-long transformation of what “used to be” and what we thought “reality” was. Our disorientation with almost every aspect of this pandemic is the opening that we can use to progress through. That we will progress through. That we must progress through. It is the crack in “reality” at the foundation of what was, so that “what was” can collapse, and we can start to move to “what will be”.

 

As a futurist, when giving a talk, I tell my audiences upfront that they need to suspend what they think is “reality”, so they can be open to what I suggest the future will look like. Reality is temporary, it is never fixed. People think reality is a thing, like security. What felt secure in January, no longer feels that way. What reality was in January, no longer is.

 

For some reason, people miss the single fundamental truth of the universe: the only constant is change. If there was no change there would be no time, as time is the measurement – at least to humans – of change. If you hold on to a fixed sense of reality or a fixed point of view, then when change occurs you are thrown into conflict, resistance and disassociation with the self that was who you thought you were, and what your reality was.

 

Sometimes, our fierce adherence to what is requires something overwhelming to break it. Today that is COVID-19.

 

From Thich Nhat Hanh:

“Attachment to views is the greatest impediment to the spiritual path.”

 

From the Nobel Laureate Poet Bob Dylan:

“Those not busy being born, are busy dying.”

 

As I wrote in the prior column here at The 2020s Decade, the 2020s will be the most disruptive decade in history. (How has the first four months of the decade been for you?) This new decade will host more creative destruction than any other decade in human history. That is why our collective experience with this deadly pandemic has within it the keys to our progressing forward.

 

COVID-19 has shown us that our shared realities and our personal realities are no longer. They have been changed forever. There is no “new normal”. A “normal”… a fixed reality, is a delusion. It is really a collective mirage or hallucination. Was it God that said the work week was Monday to Friday from 9a to 5p, and that we all had to commute to a place of work during those times? No. A shared belief only. That shared sense of “reality” is now gone.

 

Yet, it is difficult to find a business sector that did not plan on an extension of  “normal”:

 

Airlines                         thought there would be a constant demand for seats with only seasonal variations.

 

Automotive                    expected people would always buy new cars.

 

Movie Theaters              a 20th century physical distribution business already in decline, that still expected summer blockbusters to fill seats.

 

Office Space                  people will always need to commute to a central location to work together.

 

Petroleum                      for the foreseeable future, there will be a demand for oil.

 

Restaurants                    people will always want to eat out, so set high double-digit occupancy rates to reach profitability.

 

Retail                            people will always want to go shopping and will make the time to do so.

 

Sports Venues                expected fans to come out and spend lots of money.

 

 

The list could go on, but the simple truth is that there is hardly any business that will return to “normal”. That is what this decade is about… creative destruction. Yes, it took a virus to open this up, but if it hadn’t been COVID-19, something else would have done so.

 

The virus showed us that our social, business, cultural and governmental structures had no resilience. They were rigid, built on legacy thinking that could not adapt. Resilience and adaptability will be essential in any recasting, rebuilding, reinventing of what we collectively choose as our reality progressing through this decade.

 

Survival of the fittest. Survival of the strongest. = Past reality.

 

Survival of the adaptive. Survival of the resilient. = Current and future reality.