Are You Ready for the Recovery? Now May Be the Right Time to Start Hiring
By Paul Feeney Managing Director, Sanford Rose Associates - Wayne | October 2008
With the benefit of 20-20 hindsight, government economists now believe that the current recession began the early part of 2001. In fact, the warning signs of an end to a decade of seemingly boundless growth stretched back to the previous fall, when various engines of growth began to sputter. Those warning signs included the implosion of the dot-com economy, lagging sales of telecommunications and computer hardware, a sagging stock market, the drying up of capital investment and the curtailment of corporate hiring.
It just took a while for all this to sink in.
At the end of the day, however, the demise of the 1990's boom years proved once again that the economic cycle has yet to be abolished. In the manner of a sine wave, bust had to follow boom - but, just as inevitably, boom will come again. And, like the current recession did, it will sneak up on little cat feet. Because it will come in bits and pieces, we won't know for sure that it has arrived until the turnaround is well under way.
The consensus forecast remains that the U.S. has emerged from the recession, with other nations to follow as the year goes on. Various wild cards, such as further terrorist attacks or the potential war with Iraq, could delay the timing of course. Currently, however, the consensus view is supported by such encouraging signs as surprisingly resilient consumer spending, new home and office construction, and declining inventory levels for a variety of products.
Until recently, corporate hiring practices have been a lagging indicator of economic change. Historically slow to react, most companies used to reduce headcount well after a downturn had begun - and were equally slow to rebuild their workforces after recovery had begun.
Compared though to the last recession from 1989 to 1992, companies entered the 2001-2002 recession with more advanced information systems that could process and analyze mountains of business data in a few nanoseconds. As a result, the speed with which employers began to trim their workforces and compensation packages was unprecedented. This time around, employers may resume their normal hiring and compensation practices in a much more timely fashion as well.