How Tough Are Things Going To Get This Time?

I've lived through a few economic downturns before this current mess, including the one that had the bursting of the technology stock bubble as its poster child and which cost me quite a few dollars in lost options (I made the move to a tech company just a year or two too late, it seemed). So this isn't completely new territory for me.

Somehow, though, what's going on right now feels different. Part of that may stem from me being older - what does a 20- or 30-something care about stock prices going down, when his retirement portfolio is still decades away from being put to use? - or even from having more time on my hands these days with which to read so much more. But I still think that there's a worse vibe coming off of it all this time around. It seems like more people, across more walks of life, are being affected, for one thing.

The company that I most recently called "home away from home" initiated a round of layoffs last week, for example. It was a relatively small downsizing, as far as I can tell, with only roughly 4 - 5% of the local office being deemed "redundant" (or whatever the euphemism du jour is at the moment). Rumours abound that more cutbacks are in the offing there, as well as that contractors - which make up a non-trivial proportion of the work force within those walls - may not have their contracts extended once they expire. It's almost impossible to separate baseless fears from authentic concerns at times like this, though, and so I lay claim to a stance of "no idea whatsoever" in regards to what may happen to my former co-workers over the coming months. That some have been let go already, however, is not in dispute.

And that's hardly an isolated picture. The headlines are full of such tales, if you have the stomach to even peruse the depressing news outlets these days. My gaming sites lament (or crow about) the massive firings at Microsoft and Sony, affecting even the virtually-untouchable world of online steam-relieving. The comic blogs I follow talk about cartoonists losing their newspaper jobs (which, truth be told, were already drying up before the sub-prime nonsense really caught fire) as well as comic book publishers either closing shop entirely or failing to pay their creators (or both).

Vicki and I continue to look for work of some sort, but it's a somewhat half-hearted endeavour because of the job climate within which we find ourselves. I have a few friends who've joined us in the ranks of the unemployed - they at least will benefit from severance payouts and Employment Insurance benefits, I assume - but haven't heard of anyone truly hitting rock bottom just yet.

What I do hear, though, are people talking about cutting back and saving up. Those are two expressions that didn't get a whole lot of bandwidth for the last decade (or longer), as more and more Smiths had instead been busy making increasingly-flamboyant attempts to keep up with more and more Joneses. Of course, this recent turn toward frugality, however long- or short-lived it may prove out to be, insidiously feeds into the economic woes all around us. Our western culture of "Why would I save when I could instead be spending money that I don't even have?" has powered a seemingly-unstoppable juggernaut of financial growth for decades, and even the recent revelation that at least some of it was in actuality a house of cards hasn't dampened much of our nostalgia for it. I don't get the sense that most people who have changed their spending habits of late are doing so as anything more than a stopgap solution until "things get back to normal."

So I'm left to wonder: is that a realistic hope? Will we see huge economic growth again in the foreseeable future? And if we do, will it simply be the calm before the next financial storm pummels us once again? A lot of the historical material that I've been reading about finance paints this as being cyclical. While the parameters may change each time - height of the highs, depth of the lows, the precise length of the cycle - the feeling is that we go through very similar patterns, over and over again. I don't know if this one's an anomaly or not, but I do know a few things for certain (as they apply to my own situation at this time):

• one upside about not having a job right now is that I don't have to worry about losing it!
• being an incurable saver, as I've been pretty much my entire adult life, has sure come in handy right now
• being married to a woman who's always been a thrifty shopper, even when it didn't look like she needed to be, was never more appreciated than it is at the moment
• 18 years of living by a budget and therefore knowing where every dollar goes has given Vicki and I an incredible sense of confidence about what we need to live on right now as well as what corners can be cut if it comes to that

So what do the rest of you think? What's your outlook right now? How much worse will things get before they get better? And what's the "new normal" going to look like when we get there (if there even is such a thing)?