The relatively small community where I have taken refuge — the community that I now call “Home” — is a summer beach resort with a very seasonal economy. During the winter and spring, many locals were concerned that the economic crisis would prompt people to forgo their weekends and vacations at the beach this year. That would mean a dismal season for business and employment.
I sense that we are facing an extended period of economic hard times in America — perhaps worldwide hard times. We could be struggling for decades. Of course in any extended period, there will be signs of recovery, followed by new contractions. I’m far from an expert, but I think we have not yet seen the worst.
We have the graying of America and other advanced countries. We have the competition and sometimes turmoil of the flat-world economy (see Tom Friedman, The World Is Flat). We have complex financial problems to fix, rising unemployment, and falling real estate values.
But I had believed we would see some signs of temporary economic recovery by summer, and that our local, seasonal economy would be spared for this year. I thought we’d feel the pain next year, or the year after.
Business seemed relatively strong during the spring run-up to the season. The number of visitors was up, thanks to nice weather on the weekends. There were anecdotal reports that visitors were tight-fisted about spending. June went about as usual, and the resort was packed for the July 4 weekend, as always. People are going to do their best to celebrate July 4, Thanksgiving, and Christmas, come what may.
Now, the peak of the summer vacation season is here. Despite a bear-market rally in the stock markets, economic bad news continues on a daily basis. A Ponzi scheme here, a bankruptcy there. Unemployment is up to about 9.5 percent, nationwide, and set to hit 10 percent in the fall.
With unemployment so high, and house prices falling, what will people do this summer? The vast majority who still have jobs will try to enjoy the summer as usual. But how much will they spend? Over the years, even careful people have been willing to go into debt twice a year — Christmas, and vacation. Splurge a little for special family occasions, and pay the credit card bills later. That was the attitude.
Now I wonder. We all wonder. How much will people change their behavior in the face of economic recession? How afraid are people? Certainly, many will think twice about the buy-now, pay-later vacation.
We will know soon enough. In a seasonal economy, a year’s worth of preparation and work is rewarded in a few short weeks. Success or failure is in the balance for some. I’m thinking that July and August will be disappointing for many. A little disappointing? Or a lot disappointing? No one can predict the future, so we will hope for the best, and wait and see.