McKinsey is now conceding that this is not just another recession. Ian Davis, McKinsey’s global managing director, just wrote about The New Normal and called it “a restructuring of the economic order,” with less leverage and more government regulation.
For the U.S., that’s going to mean the end of Pimp My McMansion economics. Davis writes that
“it was clear before the crisis began that US consumption could not continue to be the engine for global growth. Consumption depends on income growth, and US income growth since 1985 had been boosted by a series of one-time factors—such as the entry of women into the workforce, an increase in the number of college graduates—that have now played themselves out.”
Barring a rise in protectionism, he expects that Asia will become the globe’s high-growth consumer region.
He also says three most important areas of future innovation are:
- genetic engineering
- software
- clean energy
The last two are safer bets than the first, I suspect. I’m surprised he didn’t cite robotics as a category, as well.
Nonetheless, he is certainly correct in saying that “Executives preparing their organizations to succeed in the new normal must focus on what has changed and what remains basically the same for their customers, companies, and industries.”
Not that anybody will be able to tell for some time to come.
