Even companies with good financial news embarked on massive lay-offs in anticipation of a crash. So, too, did everyday Americans suddenly showing uncharacteristic prudence, cutting back on home purchases and most other major expenditures several months before any personal financial risk became apparent. By the same token, they uncharacteristically began to save money, to such a degree that the Feds actually had to beg folks to spend more.
As a result, it has actually been difficult to separate cause from effect. Was the jump in unemployment due to the slowing economy, or the cause of it? Did capital goods orders and building starts fall off a cliff because of true lack of demand, or in preparation for that eventuality?
I'm not suggesting that the crisis isn't real, but I am curious about the role that ubiquitous information -- and let's not forget all the stories (and presidential comments) comparing the current downturn to 1929 -- has had in actually moving the curve. Did it accelerate the crisis? Amplify it? And will it shorten or lengthen it?
This isn't idle speculation because, as I wrote here several months ago, our fast-moving, digital, broadband networked society seems to be creating economic bubbles at an ever-quicker pace. Is that what just happened? And, if so, is the stimulus package that appears about to pass in Congress, all of its other egregious features aside, merely going to land on an economy that no longer needs it … and, worse, actually set the stage for the next big economic catastrophe?
Here's what I do know: All of my reporter's instincts right now are telling me that Silicon Valley, and much of the rest of the high tech industry, is already starting to come out of this downturn. There is a four-year boom/bust cycle in tech, and we were due for a downturn in 2008 anyway. (Which raises the interesting question: How much of the current recession in tech was due not to macroeconomic problems, but just its own natural business cycle?)
But every downturn in tech carries with it the seeds of the next boom. What I see out there as I travel around Silicon Valley is very different from what I read and watch in the news.
Yes, a lot of big Valley firms are hurting right now. Demand across the board basically disappeared in December, once again raising the expectation-versus-reality question. But it also seems to be slowly returning.
The shopping districts of the Valley were half-empty during the holidays but, once again, they seem nearly full as consumers come out from their bunkers and begin to shop again. Even this area's stratospherically priced real estate market, despite falling prices, foreclosures and the inability to obtain jumbo loans, seems less prostrate than it did a few weeks ago.
Meanwhile, there are rumors that the ultimate bellwether of high-tech health, the semiconductor book-to-bill ratio, which plummeted at the end of last year, is now slowly creeping back to 1:1, the official signal for the next upturn.