If your coming-of-age period was during the Depression or World War II, or both, the attitudes you carried for the rest of your life about work, financial behavior and life were shaped by those years. You lived with huge uncertainty about whether there was going to be a future. You lived with “use it up, wear it out, make it do or do without” and rationing.
By sharp contrast, if you count yourself in the early part of the baby boom, your outlook was shaped by American triumph and dominance, a future with a boundless horizon of growth and opportunity.
Those who grew up and graduated in the 1970s didn’t have such sunny prospects. They didn’t get expectations of unlimited growth. Instead they got gas lines, terms like “stagflation” and the first signs of erosion of American economic supremacy and middle-class status for blue-collar workers. They didn’t even get a name of their own to pin on their demographic cohort.
Succeeding groups – Generations X and Y, the Millennials – saw bursts of prosperity and bouts of contraction, a blossoming of technology but a dimming of security with one employer or even one industry.
So what does today’s generation of students, by whatever name they’re known, get?
They get to experience the worst economic contraction since the Depression.
Everyone likes to play one-upmanship (or in this case would it be one-downmanship?) when it comes to the economic conditions they had to endure growing up. How many times have you heard this: “You kids have it easy. In my day… .”
Indeed there have been worse downturns in specific regions of this country and in specific industries. But for sheer breadth, depth and duration of awfulness, most will concede that the current economic calamity outdoes all others in recent memory.
Which leads to this question: How will that shape the attitudes and behaviors of current generations and those to come?
Those of the Depression/World War II generation tended to shake their head in perplexity at the notion of piling up consumer debt of tens of thousands of dollars per household, or buying houses with no money down and with monthly payments that were unaffordable even if nothing went wrong (turns out they were right to hold such quaint notions).
They tried to pass on the lessons they learned to their children and grandkids. Some of the cautions stuck – but in many cases not well, and not for long. Succeeding generations, even those which had endured some cruel instruction through personal experience on such subjects as the myth of long-term employment security, lived as though favorable economic conditions, when they occurred, were permanent.
To slough off the teachings of one’s elders until it’s too late is hardly new behavior on the part of Americans. Nor is the frequent inability to learn from misfortune experienced personally. When cheap and abundant gasoline became scarce and expensive, Americans abandoned their road boats and gas guzzlers for Japanese econoboxes. When gas prices subsided, sales of trucks and SUVs soared. When prices soared past $3 a gallon, the clamor was on again for fuel-efficient vehicles.
Thus the worry grows that, nasty and prolonged as this recession has been, any valuable reforms of personal behavior will be ditched as soon as some semblance of normalcy returns.
That issue came up in a recent interview with Jay Penick, president and chief executive officer of Spokane-based Northwest Farm Credit Services.
In discussing the outlook for the economy, Penick noted that “the one wild card in this discussion is that the consumer was very, very aggressive until October 2008. Since then they have really backed off in their spending habits.”
What happens to consumer spending is “one of the most important things to watch in the next 12 to 24 months,” he added. “Do they go back to October ’08, or do they find out they could live without” what they were buying in the spending binge?
Even though they’ve lived with a lot of uncertainty and economic worry in recent years, many Americans have not been through as ugly a downturn as this. “When you have this type of shock, those habits change,” Penick said. “The new norm becomes what the shock drove you into.”
We can only hope so. If there’s to be any benefit of the recession it’s that Americans will be scared straight into more rational, careful financial behavior. The risk is that we come out of this with only stories of economic hardship with which to bore our offspring.
But just maybe the younger generations won’t ignore the lessons we should have learned from our elders but now have had to painfully experience for ourselves. Just maybe we can hope that if the generations of tomorrow wind up emulating their elders by making mistakes that wreck their personal finances as well as the national economy, they’ll at least show some originality and come up with some new ones.
Bill Virgin’s column on business and economics appears Sunday in The News Tribune. He is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at firstname.lastname@example.org.