The anticipated economic rebound letters and shapes – V, U, L, W, M – may be at least in part misguided. The depicted growth or shrinkage patterns presuppose a frame of reference that is a continuum, where tomorrow is like today except bigger or smaller. In previous economic shakeups of note, the monumental ones – The Great Depression, The Great Recession – that was more or less the case, despite variables that may have coincided (for instance, the popular emergence of the iPhone circa 2007-9).
It isn’t that there won’t be constants this time around, at least from a high level – consumer spending, government spending, capital expenditures, imports and exports – but the variables are more likely to be such that the individual makeup of these broad-based elements, their relationship to one another, their relative weight and balance in the overall, are going to be altogether different.
The iPhone and what it stood for drove big changes after The Great Recession, but more like a seed that was planted and grew into a garden. This time, the garden itself is likely to be changed with all new and different vegetables and flowers. What’s more, the garden isn’t a new field within the landscape, but the entire land.
It’s generally accepted now that the pre- and post- worlds will be different – which maybe is itself a guarantee that everything will be the same, who knows – but it does feel as though the sentiment is right. The event is far too deep and global, with far too much by way of trauma in the group’s collective mind, for it to merely rebound when it does. The economy will be transformed, and though it will be scaled according to financial value, as always, it will be a different form, a different substance, predicated on a different set of drivers and conditions, that will render the before and after effectively incomparable.
Down below the high level, businesses need to plan, people prepare for work, governments guide and spend, and investors (i.e., all these groups) will evaluate the changing circumstances as they happen and with very little precedent to guide. The flight will not be a flight to quality as we know it, but a flight to safety and firm ground as we will learn, however and whatever way this means.