Change

Earnings season is here again and if you think about what a difference there is from a year ago it makes you wonder. Generally, last April expectations were extremely low and a lot of people were convinced that the uptick in prices that started in March would be derailed and prices would fall even lower. However, companies showed that they were able to adjust and slashed costs (employees and inventory) and managed in many cases to have better earnings or at least smaller losses than expected.
A year later, the stock market has recovered quite a bit of the ground it lost in 2008 and early 2009 and most believe that we are in the beginning stages of a recovery. Some aspects of the economy are still problematic and some of those problems are the result of long term transitions that are not going away. The way people thing about housing has changed, perhaps permanently. The speculative frenzy that saw negative mortgages and rapid “flipping” has gone away, at least for now. Many companies used the downturn to get rid of employees that occupied marginal slots and these positions are not likely to be filled any time soon, if at all. The positions will be automated or outsourced as the cost of having a full time employee with a benefit package simply makes those positions unprofitable as they once existed.
Of course, the continual improvement in technology is going to allow work to be more portable (of course work that requires hands on like construction, mining, factory work are excluded from this) and that will result in more and more people being available worldwide to fill knowledge and service positions. We are going to use less oil and carbon per capita, partly because we are more aware and partly because technology is going to continue to improve in the use of renewable energy. It doesn’t require everyone to change all at once, but gradual reduction will escalate as time goes on, probably much more rapidly than any predictions. This will help with our balance of payment deficit and ultimately drive down the price of energy.
Companies are still benefiting from all the cost reductions and are now starting to enjoy some increased sales as well. While some people will have trouble finding employment, workers with the right skills and training will start to be heavily recruited. There is a clear future for our society as people, who don’t obtain knowledge that is valuable in this economy, become more and more dependent on the Government while those who do acquire those skills command high salaries and accumulate wealth.