This story begins with me on a redeye flight from San Jose to Columbus in March of 2000. I was reading Devil Take the Hindmost, a tome to be sure, about financial bubble markets. As the flight wore on, I couldn’t wait to get off and put in my sell order. But as I read, I looked at one of the charts and thought I remembered it from a book I had read back in the mid-90’s, The Great Boom Ahead. On page 34, it has a chart overlaying the U.S. births lagged by 46 years over a chart of the economy showing that in 2000 there would be a blip in the economy corresponding to a reduction in demand on the part of Baby Boomers. But, as the author warned, look out for 2007 when there would be a crash in the economy caused by the transition of Baby Boomers from family spending mode to the declining toward retirement spending mode.
Proximate Cause vs. Macro Cause
I’m not arguing that financial institutions were NOT operating without adequate controls or hedges in place. I’m also not arguing that there were no bad actors whose overzealous packing of what THEY described as crap into bundles for rubes to buy. These behaviors were only the proximal cause of the failure of some financial instruments and institutions. They simply triggered the event that was presaged by the passing of Baby Boomers from their peak spending years.
That Was Then… What is Now?
Now, the millennials are coming online so-to-speak, reaching their stride at peak earning and spending power. We are at the front edge of this generation as it turns thirty. They are a larger group than the Baby Boomers but they are more diffuse, spread out over a longer period of time. Their total economic impact will be greater than the Baby Boomers, but less rapid in its onset. As we come out of the COVID-19 crisis, the tide to which Abigail Adams referred in her letter to John is already rising:
“There is a tide in the affairs of men, which taken at the flood leads on to fortune. Omitted, all the voyage of their life is bound in the shallows and in miseries and we must take the current when it services or lose our ventures.” – Speech of Brutus to Caesar in Julius Caesar by William Shakespeare
Another 1990’s Forecast
Strauss–Howe generational theory was also put forward in the 1990’s in two books; Generations and The Fourth Turning. Generational theory by William Strauss and Neil Howe posits that American History goes through a series of cycles or “turnings” that culminate in a crisis, typically war. According to Strauss-Howe theory, the current cycle ends in about 2027. Strauss-Howe theory falls into the category of socioeconomic theory and its difficult to prove or disprove. Essentially you have to wait for a cycle that doesn’t follow the predicted cycle. However, Strauss-Howe was eerily prescient about 2008 and it suggests that we should be in a cycle when there is general distrust of institutions, great unrest and protest now. If Strauss-Howe is correct, the current cycle will end with a crisis and we will pass into a period of prosperity and growth similar to the period following WWII.
It IS The End
Whether you buy into Strauss-Howe or not, it does appear as though we are entering into a tail-wind period. Personally, I’m looking forward to the end of whatever it is we’re in.
Call To Action
Keep in mind that tailwinds and challenges end. As the next economic cycle arrives, regardless of its root cause, it makes sense to be prepared for it.
1. Prepare for the end of the pandemic driven economic cycle. As you bring people back on they will need [re]training in processes and safety protocols.
2. Look at the strategic headwinds and tailwinds as they apply to your organization and set strategies and tactics to exploit the opportunities and mitigate the risks.
3. Plan detailed initiatives to develop the organization’s capabilities to further exploit opportunities as they arise and expand in this next macro-economic cycle of expansion.
4. As you plan and execute on those plans, make sure that you record your assumptions and theories that you subscribe to so that as time passes and the theories are proved out or invalidated the organization learns from them and develops its understanding of its operating environment.
Here’s the link to The Fourth Turning, The Great Boom Ahead and Devil Take the Hindmost. [ED: Can you add Amazon links to these book titles? I have an associate account, but I think they’ve turned it off due to low volume.]
I hope you found something to apply to your business in this MBR. Let me know either way.
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