Recession versus Recession versus Depression

This is a superb comparison of length and severity of recessions and the Great Depression. As you can tell from the chart, we are just a little worse off the the 73-74 recession. Being old enough to remember that one, I'd say that feels just about right. What I have trouble seeing on this chart is the trend for the 81-82 recession. As I remember that one, it was worse than what we're in now (I still haven't seen anyone popularize a misery index like in that era) - but memory is a funny thing and facts are hard to fine.

Fighting the Recession with IT

Here's the money quote, "It is imperative that IT investment decisions receive full board attention in the current economic climate,” said Streibich. “Executive boards that are not aware of the strategic value that IT can bring to the enterprise are in danger of losing out to faster, more agile competition.”

I've had a frustrating day at work so this seems more like wishful thinking than a truth. Do I believe it, absolutely. Unfortunately, I do not believe that company boards believe it - at least not the average board. This recession is a unique opportunity to invest in technologies that will enable the successful company to seriously damage its competition.

But then, such a company must have two important attributes. First, it must have a strong balance sheet to be able to make R&D investments in bad times. Second, its management must be forward thinking.

Recessions make most management teams defensive and want to tuck into survival mode to wait out the storm. Who are the companies investing for the upturn, right now? I wish I knew.

How am I doing?

Here is my first report card on my own performance as a soothsayer. First, please read my clip from a few weeks ago.

First - the United States will lead the developed economies out of recession in Q3 of 2009. The equities markets will start to predict this in mid-Q1 2009. (Remember that stock markets are leading indicators and labor markets are lagging indicators. The unemployment rates will lag the return to growth by many months.)

The return to growth will be weak at first (maybe 1 percent in all of 2009) but will pick up speed in 2010 as the Federal Reserves money printing takes hold. (I just looked at the Monetary Base numbers for 2009 and the almost-no-growth line up until August 2008 has been replaced with positively explosive growth since then. The Federal Reserve was truly asleep at the wheel regarding the Monetary Base this year --- but at least they seem to have awakened now. http://www.federalreserve.gov/releases/h3/Current/)


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I'll hold to these predictions with this one change: My prediction for a market move starting in mid-Q1 2009 was wrong. It is now mid-Q1 2009 and the Dow is, in fact, still declining. I'll push this out to the end of Q1.

Now - as a libertarian - here is my lament. The US government appears to be making matters worse but it's not my purpose here to deconstruct things like housing plans, stimulus plans, etc. The normal mechanisms like the Federal Reserve appear to be working properly but the stimulus plan and the still-existing zombie monstrosities like Fanny Mae and Freddie Mac will, in fact, delay a recovery. Instead of a true rebound, I think we're in for a multi-year walk along the bottom with a slow ascent that won't feel like a recovery to the average Joe on the street

Mavericks in the Organization

How does investment in IT affect the organization's structure? How about interesting tidbits like this, "Firms with more PCs per employee had a more decentralized allocation of decision rights for several key technology decisions."

Or how about this juicy number? "Information use was positively correlated with increased revenue and project completion."

And this is particularly telling, "Asynchronous information seeking (such as email and database access) promoted multitasking, while synchronous information seeking (such as phone and face-to-face contact) showed a negative correlation." Now that's a statement I could discuss for quite a while.

It's a nice piece of research that you should read for yourself.