Economic Turn-Around Leads to Slow Recovery: Glen Hiemstra Quarterly Forecast Q2 2009
By Glen Hiemstra, March 31, 2009
The world economy, mired in recession, will reach a turn-around point sooner than expected. However, anyone waiting to get back to doing what they were doing before the recession will be disappointed.
As I said in my first speech this year, on January 8, 2009, to the Cobalt company, “This is not our father’s recession, but will become our children’s renaissance.â€ This prediction is coming true.
Economic Turn-Around, but Long Recovery
Current consensus views are that the recession will be deep and long-lasting. This view is overly pessimistic. Instead, the downward spiral of economic production will bottom-out between late third quarter 2009 and late fourth quarter 2009. By the end of the fourth quarter global economic growth, and U.S. national economic growth will shift to neutral or positive territory. However, this turn in direction, while a relief, will not signal a mere return to a former way of doing business.
Rather, the recovery will be a long and challenging one because it involves adjustments to disruptive technological and energy developments, and adjustments to a new global value infrastructure. The recession is, in other words, about more than financial market mistakes or regular business cycles.
A more rapid than expected turn-around is probable because of three related factors: pent up cash accumulating from increased savings and massive withdrawals from the equity markets, a shift to opportunity thinking that can occur when investors see that innovation will be necessary to drive a recovery, and effective government interventions beginning to take hold now.
However, a long and uneven recovery is probable because a new reality has emerged that is not directly related to the debt crisis.
Disruptive Technology and Energy Developments
Observers believing that financial markets caused the current recession are missing the whole picture. The mortgage and derivatives markets were symptoms of the core problem, which will not be solved simply by returning a sense of normalcy to the credit markets. The root causes of the current economic downturn lie more in volatile energy prices that have disrupted both manufacturing and auto-based development patterns. We have entered a new energy era, in which global economic growth is necessary to fix the debt problem, but the same growth will drive up energy prices, which will lead to a new bust, in a probable cycle of rinse and repeat for the near future.
In addition, Internet and wireless technologies have developed and spread globally to the point that their long-forecast disruptive effect on publishing, music, sales activities of all kinds, as well as organization structures, are now coming to a bifurcation point.
On the other side of this recession will emerge different ways of conducting business and pursuing economic development.
New Energy, Transportation, and Developments Needed
In order to recover, on the long time line that I am predicting, three related areas must be the subject of new discovery, new investment, and new models. First is a shift to intensive sustainable energy development, something we have waited too long to accomplish in a painless way. Second is a shift toward transportation technologies and most of all systems that are integrated, less auto-centered, and reliant on renewable energy, primarily electricity. Third is a new model for community development that shifts away from an auto-centric to a people-centric focus, and which captures the need for rethinking basic local agriculture. Each of these is a revolution its own. Together they would lay for the foundation for the renaissance of at the beginning of the year.
For additional information on an alternative view of the future of the economy, as predicted in Glen Hiemstra’s Quarterly Forecast, please contact us .
Glen Hiemstra is a futurist speaker, author, consultant, blogger, internet video host and Founder of Futurist.com. To arrange for a speech contact Futurist.com.