Stop Worrying and Enjoy the Recession! Yeah, a recession can be nice if you’ve got steady income. And, of course, a recession under President Obama is surely a good thing for America and Americans! Under Bush it would have been a disaster of Steinbeckian proportions, but under Obama it’s a “purifying fire!”
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The Recession Is Great
Elisabeth Eaves, 06.12.09, 12:01 AM ET
This week I refinanced my mortgage at a new, better rate, lowering my monthly expenses with a stroke of the pen. Even as I was doing the paperwork, I had to dodge calls trying to offer me similar and even better rates. If you're creditworthy these days, banks can't shovel money at you fast enough.
This got me thinking about all the other ways in which this recession might be a good thing. Job losses and property devaluations have inflicted much pain, but relentless focus on catastrophe leaves out the flip side of market logic: Prices will tumble until goods find buyers, making it a very good time to go shopping. The recession's benefits also go beyond the purely tangible. Last week I met an artist, Kendrick Mar, who compared the downturn to a "purifying fire." We were talking about the end of high prices for bad work. But there's something else going on too: a burning away of dross in our personal and working lives.
To start with the most literal example, there's a global sale on, so if your own income hasn't plummeted, the getting is good. Interest rates are down. Property prices too. Residential and commercial rents, even in New York City, are down--not, perhaps, south of 14th Street in Manhattan, but elsewhere in the city, mere mortals are negotiating better deals with their landlords, or moving to neighborhoods they had thought were out of reach.
Financial blogger and investment adviser Barry Ritholtz singles out a few more goods that are going cheap: boats, jewelry, Picassos and Monets, second homes. "Make a list of the favorite things that you want, and put in a low-ball offer, and tell people the offer is good for six months," he says. "Your spending habits should be countercyclical; You don't buy, buy, buy when the economy is great."
The downturn has procured a related outbreak of pleasant behavior: Tradesmen, salespeople and restaurant reservationists have lost their standoffish attitude. "Walk into a car dealer now, and that whole veneer of obnoxiousness is gone," Ritholtz says.
GM is going out of business, their bulky, expensive-to-run vehicles to be lost, perhaps, in the purifying fire. But new ventures are starting too. Michael Benstock, CEO of Superior Uniform Group, explains what his company has been up to. Faced with shrinking demand--higher unemployment means less need for uniforms--Superior Uniform laid off staff and posted a loss in the first quarter of 2009.
On the other hand, it's cutting deals with vendors and looking for other companies to buy. "We feel the timing is great for acquisitions," he says. "There are a lot of weakened competitors out there." And after nine decades in the garment trade, the company last year branched out. It needed to outsource more customer service functions to save money and figured other companies did too. So it turned an in-house call center in El Salvador into a separate business, The Office Gurus, that now serves not only Superior Uniform but also other U.S. firms. "Our timing was impeccable," Benstock says, though that was as much because of luck as design. The 150 Salvadorans employed by The Office Gurus have profited.
Then there are the opportunities for change in individual careers. If you still work for a newly downsized company, in all likelihood there is not quite enough labor to go around. That can be exhausting, but it's also a chance to seize new responsibilities. Raises may not come back into fashion for a while, but you can be first in line when they do.
A layoff can be gut-wrenching. But it's also a chance to ask yourself: Were you really happy about the job before it ended? If not, what can you now change that you couldn't before? The Web magazine RecessionWire (subtitle: "The Upside of the Downturn"), whose founders were themselves laid off from other companies, has nursed this idea of reinvention over the last half year, with stories on poverty-provoked spiritual awakenings and musings on next steps. As adults we rarely get to ask ourselves, "What do I want to do when I grow up?" The unemployed may fantasize about financial stability, but the fully employed fantasize about having just a darn minute to think. All the focus on "Plan B" is infectious, causing even the employed to ask themselves, if only as a parlor game, what would I do?
The juiciest personal recessionary benefit, though, may be getting out of things we didn't want to do in the first place by pleading financial hardship. A friend's back-of-beyond wedding? Too expensive. A conference in another city? Company cutbacks say no: Watch the Webcast instead and be home in time for dinner. With so many people out of work, the pressure to keep up financial appearances has disappeared. It's easier than ever to gracefully decline going out for a mediocre $60 meal. We should have better aligned our budgets with our desires all along, but now feel more bold about doing so.
In my neighborhood, the number of empty storefronts has crept upward over the last six months. I wonder if I should be alarmed. It's eerie, but also suggests a neighborhood on pause, taking a breath before chugging along in some new direction. Vanity Fair's James Wolcott, writing recently on the glories of 1970s New York, noted that the population shrank by 10% over the decade. He observed:
"It was hell on the tax base but, for those who migrated to New York and secured a foxhole while the city bled out, terminal conditions weren't all bad. There were upsides to a downward spiral. Having fewer people clogging the scenery aired out the city nicely, opening corner pockets of private and public space where all sorts of termite creativity could take place, and did."
We may be in for more crime and grime, but also more breathing room as some of the hype and waste goes up in flame. Economists are predicting a recovery, anywhere from an optimistic "it's already started" to a cautious 2011. Enjoy the recession while it lasts.
Elisabeth Eaves is a deputy editor at Forbes, where she writes a weekly column. Follow her on Twitter here.
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