Bernanke also needs to make sure to send his “recession over” memo to the home addresses of the 40 million people who are now living at poverty level in America. He’ll have to spring for the 40 million stamps to mail those memos because the growing number of people who are earning less than $11,201 per year “very likely” don’t check their e-mail very often.
It’s too bad that Blockbuster didn’t wait a day to file its papers with the SEC stating that it is “very likely” going to close nearly 1,000 retail locations in the next two years. Perhaps if the company’s leaders knew that the recession was over, their estimates might not have been as drastic.
Well, actually, probably that’s not very likely at all. Blockbuster’s challenges have more to do with a lack of vision and innovation than with a recession in the number of DVD watchers. It’s just an ironic coincidence that Bernanke’s big recession-is-over speech was overshadowed by news of Blockbuster’s 960 store closings and 10,000 more retail job cuts, which was also fresh on the heels of Eli Lily’s announcement of 5,500 job cuts the day before.
The reason why Bernanke’s declaration about the recession is so reminiscent of Bush’s declaration about the war is because while both men had statistical evidence to support their position, both of them greatly disregarded the same key variable – the human factor. When you underestimate the inestimable effect that unpredictable human emotion and behaviors can have on any situation, then you “very likely” will come up with a conclusion that history will find to be either grossly incorrect or at least incredibly inappropriate in its timing.
If we haven’t learned anything else in the past two years, hopefully the retail industry in particular and U.S. business in general has learned that not everything can or should be reduced to numbers. The stories of Circuit City, Chrysler, General Motors, and now Blockbuster serve as important cautionary tales, illustrating the consequences of omitting the human factor from the business equation.
From a financially technical perspective Bernanke’s big announcement may be 100% accurate. But from a human perspective, the bloodshed and casualty numbers of the Great Recession are far from over.
To be fair, Bernanke did also state that just because the recession is over, doesn’t mean that job numbers would get better any time soon. Not being the head of any government banking systems myself, it’s difficult for my pedestrian mind to compute how people without jobs are going to be eager to spend money. And since more than half of our GDP is dependent on consumption, as goes the retail industry, so goes the entire U.S. economy, as sad as that fact may be.
It seems to me that Bernanke is putting the technical cart before the attitudinal horse, and retailers small and large should use caution before drawing any conclusions of their own based on his words. In an economy overweighted towards consumerism, the ones with the ultimate authority to end the recession are the consumers, and only consumer belief about recession will make it so.
Retailers won’t have to worry about missing the official “recession over” memo that will come from consumers. It will magically show up in their cash registers when the time is right.
Unfortunately, though, that’s not “very likely” to happen quite as soon as we’re all hoping that it will.
More Retail Industry News Analysis:
- Past Recession Winners in the U.S. Retail Industry
- Customer Satisfaction In Recession
- Will Wal-Mart Profit From Sustainability Labeling?
