The "new economy" shouldn't be new any longer but it's still out there, defying our understanding. It's been a constant theme of financial reporting for nearly a decade — or 40 quarters, if you prefer, because everything in the new economy is measured at an accelerated pace that confounds informed speculation or long-term perspectives. The lack of precision in defining it has invested the new economy with an aura of mystery, and some danger, too.
When we first learned about it everything was going to be terrific: consumer choices would guide business decisions, information-based enterprises would override bricks and mortar, and so on. Then, the bubble burst. Investors and everyone else were burned when they discovered that all those great ideas had no equity to support their valuations.
For much of the past four years the economic news has been good, very good by historical standards. The U.S. federal trade deficit is declining. September's 6.8% drop was the largest one-month decrease in five years. The increase in wages and benefits in the second quarter was the most since 2004, and the unemployment rate matched a five-year low. If you've got any more good news, keep it to yourself because most of us are too stressed out by all the other information streaming our way.
Apparently we can succeed in this new economy, but understanding what it means and how it works leaves no time for any of that earlier optimism.
Here's what I mean: The principal indicator of economic success in the new economy is "productivity," the proof that companies are getting a strong return on investments in raw materials, equipment, and especially labor. That means that you and I, and millions of others, have been identified as cost factors. Being reminded of that with every monthly economic report is unnerving no matter how positive the big picture seems to be.
More to the point, maintaining that level of productivity is exhausting. Those of us with desk jobs may remember when there were assistants to receive and send correspondence, aid with research, and so forth. Those whose jobs require more physical skills know that there are fewer hands available to achieve the output levels that will confirm an acceptable level of productivity.
This is important, I think, not because it indicates any new economic phenomenon, but because so many millions of people are fully invested in the new economy, but only partly informed of what is happening. Everyone hears news, facts, theories, and rumors all the time, some of it instructive, most of it not. Constant reporting of corporate and financial news feeds the need for information, and adds to the overall sense of chaos and disorder, and impending crisis.
Here's an explanation, as good as any other: the dominance of information is the only thing that distinguishes the new economy from any old economy in which we felt more comfortable. It makes things happen faster, and it collides the entire known world into one market. It leaves us wondering if anything is certain. And as soon as we find a solution, it's changed by other factors. So, even if your personal situation is solid and your productivity is high, there's nothing to certify that your position, or your organization, or your industry might not be replaced when something changes. Is there anything new about that?