The Recession Is Official – Now What for Tech?

In a move that surprised absolutely no one, the U.S. government finally, officially declared the current economic “downturn” a bona fide recession on Monday. Negative growth began in the second quarter and continued into the third.

So, the dictionary definition of a recession has been met. Webster is satisfied. And we can now all officially ask: When will the turnaround begin? As if we haven’t been asking that question already.

In fact, some of us have been asking whether the turnaround started even before the recession got its classification. The real question is: Since technology led the way inthis recession, will it be the first to snap out of it — or the last?

Spread the Blame

No one is blaming the tech sector for the recession. The reasons are much bigger than dot-com bubbles and overeager investors.

This cooling-off period would have happened even if Internet grocery service Webvan didn’t blow nearly a billion dollars during its short life span and even if a whole lot of people had stepped up to buy a new PC this year.

But technology did lead the way. In fact, it’s fair to say that the e-commerce and dot-com sectors have been in a recession for many quarters. The tech stock plunge, the concurrent shakeout of Internet firms, the layoffs. Add it all up.

First in, First Out?

There are two ways for e-commerce to take part in the recovery. One is to lead, the other to follow. And there are signs that, given the resiliency of online consumer spending and the strong start to the holiday shopping season, e-commerce might be leading the charge out of dot-com pain into dot-com gain.

The pom-poms should be put away, though, because this recovery, whenever it takes place, isn’t going to be about pie-in-the-sky optimism. No one’s buying that, not this quickly.

This recovery will be about real-world gains already made and put in the bank. Meaningful confidence, with a capital “C,” will return one baby step at a time.

Gaining on Time

Which is why e-commerce is in such a good position.

Regardless of the vagaries of the fourth quarter, more online companies will be profitable in 2002 than ever before, it is logical to predict. Quarter by quarter, investors will make their growing confidence felt by boosting stock prices.

And though they’ll have to do so cautiously, companies with higher stock prices can grow. They can invest in infrastructure. They can make smart acquisitions with their additional capital.

And they can hire workers. No matter how astute an economist might be, heor she can’t escape the fact that it’s people losing their jobs that causesthe real pain of recessions. The rest is just numbers on paper.

First in, Last Out?

Pessimists — and there are plenty — say that high tech and e-commerce will lag behind on the recovery curve because they took such a hard fall on the way down. But hard times have taught us a lot about e-commerce and its ability to be resilient and adapt. E-commerce 2002 will look nothing like that of 1999.

Not all the changes are for the better. I personally miss the Pets.com Sock Puppet and all the free stuff MotherNature.com sent me. But the changes have made e-commerce smarter and stronger. And that only makes it more appealing for those skeptical investors who put their money in the pot.

The revolution is over. That was the last boom cycle. A new cycle is underway, with the upward swing either already here or just around the corner. This time, it’s about evolution. E-commerce has learned its lessons, many of them the hard way.

A more battle-tested general the economy could never find.

What do you think? Let’s talk about it.


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


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