Thought for the day – Understand the cumulative effects of the recession

Just in case the sprouting green shouts of the recovery are making you feel too cheerful I thought I would write a few words of doom and gloom.

Seriously, I think there is an issue that we are not discussing and one that will have a big impact on marketers - the cumulative effects the recession on the real wellbeing of people and their perception of wellbeing.

Let me give you an analogy. Most moderately health people can walk 15 miles in a day. At a push most people can do it from two days. Come day ten of continuous walking a lot of people will have a given up, either because of physical problems but most likely they will have run out of stamina.

This recession and its multiple mutations are going on for a long time. Just imagine how things will look at Xmas 2012 if (when) we have had another 2.5 years of high unemployment and anaemic growth and generally bad economic news.

Why do I reckon that we are in for multiple marathons and not a quick 100 metres dash?

This is a summary of an article in today’s FT (Economic cost: Crisis leaves lasting scars). Afraid it is a subscription publication.

The losses caused by the recession (2007 to 2010) is equivalent to 5% of all of the loans and securities held by the financial institutions in US, Europe and Asia and is the same proportion of the value of the total output in the world in 2009. You don’t get over that in a few dozen months.

The IMF states in its latest global financial stability report, “US domiciled banks have recognised about 60% of anticipated write downs, while Eurozone and UK-domiciled banks have recognised about 40%”. In other words there is more pain to come in the financial sector.

From the consumer’s perspective life is just as grim. The IMF reckons that, incomes around the world will be about 10% lower in 2010 than was expected as recently as three years ago.

Any permanent loss of output will hit households hard over the coming years, as everyone has to adjust to the fact that the world is poorer than expected.

But the scars will be permanent and the path of output is likely to be permanently lower than had been expected.

If I am right then you had better be planning for a marathon not a sprint. If I am wrong then tell me why.Dick Stroud