Last week I was heard a radio announcer discussing five new norms for society that were emerging. These new norms included: 1. long-term unemployment, 2. renting vs. owning, 3. saving vs. spending, 4. staycations vs. vacations, and 5. higher tax rates for the wealthy. Each of these have the potential to affect us individually and collectively.
It seems the majority of economists, politicians, and business leaders agree that long-term unemployment is here to stay. Recently at an economic development conference, a very renowned professor of economics from Emory argued that this recovery will most likely resemble the 2000-2001 recovery. That period was known as a “jobless recovery”. And he forecasts that most of the available data points to this recovery being equally jobless.
This is important for many reasons but the most important to me is the dramatic and prolonged impact this new norm will have on those lacking adequate job skills. Most of the job losses have occurred in those jobs requiring minimal skills. As the economy improves, the jobs that will be created will be those requiring a higher skill set. In order for our local citizens, fellow Georgians, and even those unemployed throughout our nation to gain employment, they will have to pursue their skills in order to compete for the new jobs.
Given the dire effects the housing bubble and subsequent problems within the financial sector, a new norm of people renting vs. owning is also a pretty safe bet. An environment of fairly open and easily obtained capital / debt has morphed into one in which even those with good credit will not be approved for mortgages. Those who just a few years ago could obtain a mortgage with little to no money down will be forced to rent their housing for an extended period.
Although we need new construction for the carpet industry to fully rebound, a growing renters market will certainly help with carpet sales as owners of apartments / rental properties traditionally replace their carpet much more often than those that own their homes. As apartments become a larger percentage of available housing, carpet sales could see an increase even while the new home market continues to recover.
In an era of pronounced federal budget deficits and extreme national debt levels, who could argue that a new norm of saving vs. spending is anything but good? Many argue that the US economy has been running on consumer debt / spending for so long, that the correction we have endured was inevitable. As so many have lost so much of their accumulated wealth, saving for the future will naturally become more prominent in the American household budget.
This new norm will certainly help most of us rebuild some of the lost wealth that disappeared during the “great recession”. Our children who have lived during these times and have seen a parent or both parents lose their jobs, or their homes, will be much more likely to be more financially conservative.
As families reduce spending in order to save, transitioning vacations into staycations is another natural trend. Most communities have tremendous recreational / leisure assets right in their backyard. It may not be Disney World, but how many times does one need to see Mickey. Younger generations are much more interested in enjoying the outdoors and recreational activities that are abundant within a short drive of their communities.
Greater Dalton may not be a vacation destination that can offer a family a week’s worth of fun / leisure, but we are certainly a staycation destination. We have tremendous outdoor and recreational assets in our community or within the vicinity of Greater Dalton. Staycations are for those families who live here and want to enjoy a more low-cost and close by “getaway” and for those who live within a half-day’s drive that will come here for a weekend. Staycations have been a key tourism strategy of our Dalton Area Convention and Visitors Bureau and this new norm will only make that strategy more successful.
The current debate raging in Congress is the Bush tax cuts. Should they be extended or should they sunset. Extending all the cuts except those that benefit those in the highest 2% of earners seems acceptable by both parties. The President and those in the majority argue, however, that those at the top can afford to pay a little more and should not have their tax cuts extended. Given that it looks like they will punt this issue until after the mid-term elections, the new norm of higher taxes for the wealthy seems imminent.
Taxes should be understandable, transparent, and fair. I think most would argue that most taxes rarely meet this definition. It is easy to pick on the rich. But this class of taxpayers is the investors who enable our economy to grow. They are the business owners, large and small, that create jobs. These new norms seem appropriate given the times we live in.