Cultural changes

One of the outcomes of the recent recession is that certain trends that had started to influence the ways people lived and did business have been accelerated. Between the oil shock and the financial shock of the last two years, we are moving to a society that uses less energy, does less travel and spends less.

Now these are actually good and necessary changes, but they will influence the recovery and will influence the profitability of certain industries. We just finished a period that was exceptionally excessive in the wasteful nature exhibited. Low energy costs and the exploitation of areas that were somewhat remote from traditional areas, led to McMansions, large fuel guzzling SUVs and a tremendous increase in business and vacation travel.

Considering the improvements in technology and the awareness of the environmental issues that were were developing at the same time we had a potential conflict brewing between these contradictory trends. However, the conflict was resolved by the recession, at least for now. We have been forced to abandon marginal and overly large housing and switch to more energy efficient autos. Also, the cost of travel in both expense and lost productivity is also becoming more and more unnecessary as technology provides cheaper and more productive alternatives.

As the economy improves, we may see some minor reversals in these trends, however, the shock has been so great that I believe we have turned a corner and that these environmentally friendlier and more cost effective trends will continue.

So what is the impact of this? Certainly auto makers have started to adjust. Further, I believe the real hope for housing recovery is to work on making existing homes more energy efficient and able to utilize renewable energy. Also, hotels and travel related industries need to adjust to what is most likely a permanent or at least long term decrease in business. This will of course drive out inefficient operators and allow those able to adjust survival.