What is the “New Normal”?

Back in March of 2009, as the financial and real estate meltdown was occurring, McKinsey & Company issued an assessment where they posited, “This much is certain: when we finally enter into the post-crisis period, the business and economic context will not have returned to its pre-crisis state.” Whatever the “new normal” will be, it will not be the same. Nonetheless, history has shown that successful organizations adapt to changes in society; and usually, when the rules governing society get out of whack, (in a free democratic society) society corrects the rules and the pendulum swings back.

So, where are we in this process? Are we at the “New Normal” or are we still in a state of flux?

In the design and construction industry, reports vary. ENR’s Indices show much optimism for the level of work in the industry overall. However, a recent report summarizing a meeting of global engineering firms indicated pessimism for the near term. What do we believe?

If you dig a little deeper, what you see is that the big engineering firms significantly rely on large infrastructure projects funded by government across the globe. Economic stresses are affecting those spending programs. In the U.S. specifically, unemployment is still high, and real unemployment is much higher than the reported rate (due to how it is calculated). The U.S. economy – still the greatest economic engine in the world – has seen government shut downs, takeovers and sequesters to add to the stresses.

And yet…we grow.

In the U.S. private sector, spending is picking up. Stocks are strong. U.S. Corporate cash balances have been at an all-time high. With bright spots showing up in the economy, companies are beginning to put those assets to use in expanding capacities and improving efficiencies. Unemployment, while high, is inching downward. Housing starts are up. Housing values are improving. Inflation is under control and interest rates remain low. The private sector is resilient. Businesses who compete will manage their assets to win, to manage risks, and to capture market share. We adapt and respond.

Are we at the new normal? I hope not yet. Hopefully, the new normal is not a growing prosperous economy with high unemployment. That scenario will only create an economy with greater segregation and a society of “haves and have-nots”, greater unrest and more energy wasted in complaining than in working for solutions.