There is quite a bit of buzz today about the Clint Eastwood Super Bowl Commercial. The 2-minute spot was a follow-up to last year’s Eminem Super Bowl commercial for Chrysler. This one was also a spot for Chrysler, but it expanded the embrace of the message well beyond just Detroit, with Eastwood delivering a message of confidence that America will be back.
I certainly agree with the Easatwood message. America is a resilient country and it will recover fro the present economic downturn. In fact there is ample evidence that the recovery is well under way – lower unemployment and increased manufacturing output to name two. However, those who naively believe that we will return to ”how things were before” are sadly mistaken.
In the midst of this recession the big “reset button” was pushed and whole new norms established that have nothing to do with how things were in 2005/6. We ain’t goin’ back there kiddies. Real estate values have been reset and will have to slowly grow their way out of the hole that they are in now. So called middle class jobs in manufacturing have been largely negotiated away in favor of two-tier wage systems and guaranteed benefits retirement is now considered a quaint thing of the past. We’ve been to Oz, but when we get “back” we won’t be in Kansas anymore either, Toto.
While one may not consider this to be a good thing, it was pretty much an inevitable thing. The whole ramp up to this bust has its roots firmly in the 1980’s and 90’s and the whole “me” generate thing that was going on back then. The balloon and bust of the early 2000’s was something that many saw coming for a long time, but few paid much attention to the alarms that might have been sounded. After all this was also the feels good generation and warnings didn’t feel good.
So now the question isn’t really how long will it take us to get back (that answer is we’ll never get back). The real question is, how long will it take us to adapt to our new reality and get on with life? I suspect that answer is that it will take us a generation. The current generation (really the so-called baby boomers) is setting on over a Trillion dollars in lost equity in houses that they can’t afford to sell. That isn’t going to change for at least 10 years. Until this overhang of loss works it way out of the system as foreclosures or short sales a huge part of the buyer/seller pool will remain frozen on the sidelines and the market will remain in the doldrums.
We are seeing better news in the market in terms of increases in housing prices mainly due to the shortage of available homes from those would-be sellers who are on the sidelines. This is the new normal and will be for quite a while, it appears.
So, yes America will recover, it will be back, just not back to the same place as before. That doesn’t necessarily mean it will be a better or worse place, just a different place. What we all make of that in our lives is up to us.