QandO

March 31, 2004

Doomed! Or: Our regularly scheduled quad-annual Armageddon
Posted by Jon Henke

Good analysis of the current economic situation....

But, as occasionally happens, there was a couple of years of "irrational exuberance", and things seemed much better than they really were. We were headed for a crash, and sure enough, by 2000, we got it.

Goodbye, $120k web developer salaries. Goodbye, office shiatsu massages.

But, we'd already been conditioned to seeing that 4% unemployment rate and hefty job creation as normal.

The crash itself was the cause of a great crisis of confidence, especially among middle-class IT people. All of the sudden, there weren't high paying jobs for as long as the sun burns hot in space. And, with a glut of IT people roaming around looking for jobs, salaries for the remaining jobs weren't much to write home about. So, you get this pool of middle-class angst about jobs.

To top it off, there aren't a lot of new jobs being created yet. Partially, this is structural. After all, where are new jobs going to come from? It's not going to be from steel making or textile mills, or farm labor. It's got to come from the more high-tech sector. Aah, but we've just gone through a tech correction that eliminated a lot of tech jobs.

So, what emerging industry will drive the economy next? I really don't know.

Dale makes a good point, though, about the role of psychology in our current Chicken-Little economic spasm....

And I think the media is a factor, too. There's constant harping of how badly the economy is doing. It doesn't matter that the economy is doing quite well by any historical measure, much of the public noise is of the doom and gloom variety, and that doom and gloom is heightened because it's an election year, so the party on the outs its constantly hammering on it.

Combine that with newly self-employed people who are feeling a bit of trepidation about their job security, and it can be a potent force.

You know. Let everybody know the sky might really be falling! Or, er, it might just be raining...but the sky is probably falling!

The public, either doesn't know how to evaluate economic data...or simply doesn't know better. For example: awhile back, a commenter left a message here, saying (roughly) "unemployment is the worst in our nations history". A friend of mine recently said the same thing, claiming we had "record unemployment".

Now, you and I know better. The data is readily available for all to see. Under the surface, as Bill Hobbs is learning, the job market is changing, but growing. And yet, the public believes the sky is falling. Why? Maybe it's stuff like this.

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