Running Out of a Recession
If you aren’t familiar with the standard business cycle, it goes something like this: First, a company starts to turn a profit and devotes more resources to a consumer-driven economy. Smart companies expend, and expand, wisely and hold ample cash reserves for a rainy day; in other words, they keep their ambitions in check. Others just keep spending, urged on by competitors and a zeal for breaking records with little thought to how that unbridled growth will be sustained. During the next phase, everyone inhales the air of prosperity and continues to spend to keep the buzz going. But businesses are like living organisms that are always changing. At some point, something triggers the collective consciousness – a market shift, inflation, energy crisis, etc. -- and consumers start to retrench, prompting a chain-reaction economic slowdown. This eventually leads to an overall, sometimes painful contraction – sloughing off the excess that accumulated during the best of times. We know it better...