Certain years wind up being a lot more important in history than the rest. One can think of 1776, 1789, 1812, 1861, 1914, 1929, 1938, 1945 and 1968 as a few examples.
Fifty years from now, it's a good bet that 2008 will be seen as one of these years. Right now, most Americans and virtually all advisors are still waiting for the dust to settle and some semblance of normalcy to return.
But when normalcy stages a comeback and consumption and investment resets at a new level, what will it look like? No one knows exactly, but some outlines are taking shape on the horizon.
There's an emerging consensus that consumer spending, in particular, is going to recover slowly. Around the nation, Americans at all income levels are finding ways to enjoy themselves without spending at the breakneck pace they have in the past.
Parents have discovered they no longer get in fights with children demanding the new video game du jour after their children have seen their best friends' parents lose their jobs. There are even anecdotes about some relatively young children questioning their parents' generosity and asking them whether the family unit can afford goods suddenly viewed as luxuries. Moreover, for the first time in a long time, those few folks fortunate enough to retain their wealth are starting to feel that flaunting it is poor form.
It's too early to conclude with any degree of confidence that the worst recession in most Americans' lifetime may restore some traditional values to a shop-until-you-drop culture, but it's obvious a new sensibility is on the rise. So the question becomes, how durable is it?
The collapse of the last global housing bubble in the early 1990s produced huge shifts in nations like the U.K., Sweden, Norway and Finland, with savings rates rising from near zero to the low double digits for much of the decade, and consumption falling to the 5% or 6% area. The United States experienced a similar, if less dramatic swing, and began saving more. But that trend ended when the American economy took off in the mid-1990s.
The guess here is that this time our desire to save will have more staying power. If so, that means it will be a great time to be a financial advisor, as our columnist Bill Bachrach likes to say.
Already, many financial advisors are finding that 2009 is turning out to be a great time to win new clients, as senior editor Eric Rasmussen documents in this month's cover story. From a number of random conversations I've had with financial advisors, old clients and new ones suddenly don't need to be lectured about profligate spending or absurd investment expectations.
The events of 2008 did that job for advisors.
Evan Simonoff, Editor-in-chief
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