Is 2011 the Dawn of America’s New Optimism?
That was the question posed by Bruce Nussbaum in his December 30 Fast Company blog. We’ve spent a great deal of time lately thinking about prior cycles of fear and pessimism, so Nussbaum’s post caught our attention. He reminds us that America once seemed locked in an unwinnable struggle with the Soviet Union until, quite suddenly, we weren’t. Likewise, in the 1970s, OPEC was formed and oil prices soared, contributing to the stagflation that appeared certain to scuttle the American dream; except that it didn’t as we watched the real price of oil ultimately plummet. By the end of the 1980s it was clear that Japan was eating our lunch and would become the dominant economic power in the world. That story line was immediately followed by two decades of economic malaise for Japan. As Nussbaum puts it, “there is something about being a ‘Comeback Kid’ that is deep in American culture.”
For much of 2010 it seemed that people were still walking around traumatized by what happened in late 2008/early 2009. Pundits declared that the system is broken, the economy doesn’t work anymore, the financial markets are dysfunctional, and that we’re entering a period of diminished economic growth and low equity returns. The evidence for these views, however much they resonate emotionally, ranges from slim to nonexistent. In fact, the historical record shows that it is in the nature of reality that we will from time-to-time suffer a negative surprise. One need only recall that people were also traumatized by the oil shocks that in 1973/74 precipitated the steepest drop in the stock market prior to 2008/09. And the list continues with the deep recession of 1981/82, the market crash in October 1987, the first Gulf War in 1991, the dot-com meltdown in 2000 and the terrorist attacks in 2001. In each instance, the country and the markets recovered, and always for the same reason: individuals are adaptable, and, given the right environment, their individual adjustments aggregate up to a healthy adjustment for the economy as a whole.
In the present instance, pessimism is slowly being overwhelmed by the reality on the ground. Less than a week ago, the New York Times reported that “Forecasters Predict a Strong Recovery in 2011.” The Times quoted leading economists and policymakers who cited the tax-cut compromise and rising corporate profits and consumer spending among their reasons for optimism.
So, be of good cheer as 2010 draws to a close, and allow us to wish you and yours a healthy, happy, and prosperous new year!