Things are looking crunchy. How bad things are nobody really knows yet, but it does look as though several parts of the world are either in, or are entering, recession (a recession is when someone you know loses their job. A depression is when you lose your own job). Given that we don’t know what’s happening it’s premature to speculate about specific consequences. Nevertheless, one can perhaps make a few general statements about what’s likely to happen as a result of recent economic events. So here’s a list of predictions:
1. Lower oil prices
Lower economic growth means less demand, which means less appetite for energy and specifically oil. The fact that people were worrying about oil at $140+ a barrel just a few months ago is a perfect demonstration of the cyclical nature of both markets and risk.
2. More home cooked meals
People have less disposable income and are feeling anxious about what lies ahead so expect to see more cooking from scratch (to save money) and more home cooked comfort food (to feel better on the inside even when things on the outside are looking gloomy). At the extreme people will also start growing their own food — at least until they realise that this isn’t quite as easy as it looks. Nevertheless, gardening as an antidote to stress should make a comeback.
3. More affordable housing (for a while)
One of the major reasons for the current financial mess is that individuals and institutions alike thought that boom and bust had ended. House prices went up but no longer went down. This was great news for real estate investors but if you simply needed somewhere cheap to live it wasn’t.
So say hello to more affordable housing (assuming you can find anyone still willing to lend you money to buy one). However, this might not last long because people are already viewing houses as ‘safe’ places to put their savings.
4. More thrift
Expect people to brand switch from what are perceived to be relatively expensive supermarkets (e.g. Waitrose and Tesco) to cheaper discount alternatives such as Aldi and Lidl. Also expect retailers to place more emphasis on value for money. We will also see more trading on e-Bay,
more second-hand clothing swaps, more charity shops and more make do and mend.
5. More time with family
In boom times time becomes relatively expensive. Thus people spend less time with their family and friends and outsource all sorts of things from childcare to cleaning. In a recession such behaviour tends to reverse so expect to see people spending less time at work and more time with their immediate family.
6. More street crime
The recession will not be universal and some wealthy areas will be almost immune to the ravages of the economic chill. One consequence of people having less money (or none) will be an increase in crime, especially opportunistic street crime.
7. Less obesity
Lower oil prices may result in people driving more but a more likely result is people walking and cycling more. Add to this a trend towards healthier eating (because fresh food is cheaper and people have more time to cook from scratch) and one result could be leaner, healthier nations. Actually this is probably rubbish.
8. More time in education
If there are less jobs or the job market becomes more uncertain then it would not be unreasonable to assume that people will spend longer in the relatively stable and risk free world of education.
9. Interest in serious news & media
In times of serious economic upheaval and anxiety individuals have two options. The first option is to bury your head in fantasy and escape (everything from escapist movies to virtual worlds). The second route to find out what’s going on. Expect to see a revival in the fortunes of serious newspapers and magazines like the Financial Times and The Economist.
10. More big-bank consolidation
Market consolidation has been going on for at least a quarter of a century but recent events will speed up this consolidation, especially in sectors that have been most exposed to debt. Expect to see more big global banks but also expect to see more interest in local non-bank lenders such as building societies and savings and loan companies.
I find it interesting how short-sighted this list of trends is. It is almost as if the country being described is disconnected from the rest of the world.
To this list I would add, increased global poverty in many parts of the world. The number of nations in the “failed state index” will grow as many nations, whose borders were determined by decisions made in Berlin in 1885 prove to be ungovernable now that the age of cheap energy is over. This willresult in increased flows of refugees from the South to the North.
The transfer of labour intensive employment to the developing nations of China and India will continue unabated. How can Germany where jobs cost $45 per hour compete with China where the same job costs $1.50 per hour? As a result, as I don’t see any of the promises about “Green-clean technological transfer” actually coming true, Greenhouse Gas emissions will accelerate and the adverse effects of climate change will occur.
Governments, strapped for cash to deliver on promises will increasingly be tempted to look for people to blame. Scapegoats will be found in Developing Country people taking “our jobs”, either directly, through the transfer of employment to India or China, or the increasing numbers of refugees present in our midst.
These effects will see increasing global pandemics in increased malaria, and other tropical diseases, and renewed ones like TB coming north. The collapseof public health systems, the misuse of antibiotics, and the fact that the human body has become the last great ecosystem of the planet for bacteria bodes badly for us.
The fact that the great powers have not passed nuclear technologies on to an international transparent and safe regulatory body, means that nuclear proliferation will continue. Now that Israel is the 6 biggest nuclear armed state, and that this has been condoned and aided by the USA for a long time, and that the nuclear industry is marketted as the answer to global warming many others will seek to join the club.
These more disturbing trends need to be added to your list of how wonderful it will be when Americans eat at home, shop locally or grow thinner.