2008: Is the crash as bad as we fear?

Morris, now

This is Then and Now. I'm Morris Misel. For more than 30 years I've been on radio talking about what's coming next.

In every episode I play you something I said with the date on it and nothing changed and then I tell you how it actually turned out and what I make of it now. It's Wednesday, the 31st of December 2008. New Year's Eve and I'm on 3AW in Melbourne.

The financial crisis had hit that September and October. Earlier in the show an economist had been talking about a million Australians out of work and a caller had run in about 8% unemployment. I'd been asked for my annual list for the year ahead and I wasn't in the mood to join the gloom.

Have a listen.

On air: 3AW Melbourne, Wednesday 31 December 2008

Look ahead into the future. We had an economist earlier who was giving us doom and gloom that there are going to be a million people unemployed in Australia next year. What does your crystal ball tell you Morris?

I'm not a doom and gloom merchant so let's start with that. I'm a glass overflowing person, not even half full. Excellent.

So the reality is we all know next year is going to be tough. Yep. I mean that's a given reality.

What happens to us next year is still in our hands. I read this stuff and it's almost like it's a fair con place if it's set in concrete. The reality is none of this stuff happened.

We are going to have a tough business. It's going to have to be cautious. We're going to most probably spend less than we have before but it's up to us to make the best out of what we can with what's given to us.

There are still businesses out there that are functioning really well. I'm lucky enough to travel in and out of businesses every day of my life including weekends and I see some of them really doing it tough but some of them beginning to understand that next year they're going to have to do things differently. What they did last year isn't going to work.

So yes I think we're going to have a rise in unemployment. I don't think it's going to be anywhere near as severe. Yes we're going to have a down turn in business but again I don't think it's going to be as severe and I think we're going to see the first half of next year pretty much like we've seen it now.

I'm saying that by the end of next year what I call the potholes are going to start to smooth out and most probably and it is a way off. Most probably by 2011 business will have started to build a new sense of normal. What's new in 2011?

That's the good news. It's a new sense of normal. That doesn't mean that doesn't mean next two years are going to be bad.

It just means that we're going to have a lot of baggage we're going to have to share ourselves with. We're going to have to think about how we do things differently and it's going to take us at least two years to come out the other end and begin to say well this is a fairly normal day. The sun's really bright and everything's wonderful.

As it has been for the last five, six, ten years. So what are you seeing in the future? So we're talking about my top ten list.

This is an annual list of predictions for 2009 facts. You know what? There was in the weekend Australian I think it was.

There was the predictions of all these like heady economists and and all these that they have their predictions from last year and they put their predictions this year and then they looked back at what they actually predicted last year. Every single one of them was wrong. Yes, I'm happy to say I got nine and a half out of ten.

Really? Nine and a half out of ten. Yes, go back to my last years and they're at my website and have a look at them.

The only one I got slightly wrong was the economy, which I said would be bad. I just didn't think it would be this bad this quickly. But I definitely said it was going to be bad this half of the year.

Now, mine are far easier because they're not just economy, they're business sense. So our business trends are far easier to track. The economy is like this beast that just let's go forth and it changed so dramatically.

So what are what are the business trends that you're foreseeing? One of the first ones I think is what I'm calling cautious consumer. No, you know, there's no doubt about that.

But what we're going to see over the next 12 months is a consumer that's not going to be as quick and as ready to put their hand in their pocket to buy things. They're going to have to think twice about it and they're going to have to justify why they want that purchase. And for retailers, and is that just because of that?

Because as one of our callers said earlier, although even if they've eight percent unemployment, ninety two percent employed. So that ninety two percent that's employed, why are they going to change their concept because of fear? Because of fear, absolutely, because they're buying into all this stuff.

The reality is that they're not sure anymore. Now, they have a job now and they're fairly sure things are going to be OK. But all I need to do, unfortunately, is open up the newspaper or listen to somebody else and they're going to hear a doom and gloom story.

So the natural thing we do is we kind of pull ourselves in and we say, even though I'm kind of OK, let me make sure for a little while that I am OK. I'll hunker down. I won't buy that big plasma TV.

I might buy something a bit smaller.

Looking back

I said unemployment would rise, but nowhere near as badly as people feared, that the first half of 2009 would feel a lot like the end of 2008, and that the potholes would smooth out by the end of the year. Unemployment peaked at a bit under 6% in the middle of 2009, and Australia went backwards for just one quarter and never fell into recession, so that's one I'm glad I held my nerve on. The cautious consumer was the other big call.

People with jobs holding back because they were scared rather than broke, and that's exactly how it felt in the shops that year. And a new sense of normal by 2011 is how change usually lands. I think you end up in a new normal after a while you stop noticing it.

The headlines were screaming, but so far it had all been a lot milder than people feared. Next time, we're in 2009, and as the dust settles, the gadgets start coming back.

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That's Then and Now. If you'd like a little of this in your inbox every Tuesday, my email is morrismisel.com/join. And there's more of me to watch, read and talk with at morrismisel.com.