Tuesday, June 8, 2010

The W Recovery?

A "W" recovery is not a veiled reference to former President George W. Bush.  There are all kinds of single-lettered shapes of recoveries in economists' worlds.  The "W" recovery is a reference to the emerging and growing pessism that is following some recent signs of recovery in the economy.  It's a "double-dip" recession.

The thinking goes like this:  A "V" recovery is where when you hit the bottom, the up side of the "V" is a return to where you were.  That's a good recovery.  We all like that kind of recovery.

Until recently, there was a growing sense that "V" was here and that we were riding a "V" upside up.  It was in the national and regional news.  It was in regular business chatter.

Just recently it suddenly just turned.  The "it" is people's collective thinking.

The "W" is where we return to higher levels but, unlike the "W" in the font I'm using, the recovery doesn't return to previous levels and right when it peaks, we drop just as quickly again.

I've seen the "W" recovery mentality gaining ground in many people's collective consciousness.

More and more people are fearing that the growth in jobs (Ohio added more to employment than any state in the Union in April) is driven by Census jobs.  The thinking goes that when the Census scales back in July, that we'll tank again on the job-front.

This thinking causes people to hold off on investment and celebration of recovery with buying "stuff" to further fuel the economy.

Same goes for the stimulus-related jobs. The thinking is that stimulus-pumped-up-jobs will go away when the stimulus money goes away soon.

This thinking causes businesses to hire temp workers and let unfilled jobs remain unfilled a bit longer.

I recently had a deal on solid footing for a couple of months.  Then, last week, I found out the deal is a no go now on our site.

The investor found a way to put less money in and make the investment work somewhere else and better if the "W" recovery proves true.

We're probably the only ones that lose here, but the downside is still a downside with this thinking too.

Could the fear of "W" actually become the cause of a "W?"

That's what I fear most of all.

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