THE BACK PAGE: Living the New Normal
by Charles Anderer
September 1, 2010
If there's a phrase out there that has triumphed over all the others to describe the current uncertain state of unease felt by every economic actor in the globe save Apple and holders of physical gold bullion, it's the New Normal
The phrase gained a lot of traction in the financial world
courtesy of the smart guys over at Pimco, which manages more than $1 trillion
of investor money and was making noise about an unsustainable, over-leveraged
economy well before the meltdown whose two-year anniversary we mark this month.
How time flies when you’re
slogging.
“The basic premise is that we are in the midst
of a major national and global realignment,” Mohamed El-Arian, the firm’s CEO
and co-chief investment officer, told USA Today last month. “The main catalyst
was the financial crisis of 2008, but the underlying factors have been there
for a while. The question is: What does the world look like post-realignment?
The world is on a bumpy journey to a new destination and the New
Normal.”
The New Normal means, among other things, lower growth, continued
high unemployment, more regulation (because nobody on either side of the
public/private equation can afford another financial crisis any time soon;
El-Arian calls it “lower speed limits with more cops on the highway”), the
migration of growth from the deleveraging industrialized world to
wealth-building emerging economies, and a volatile investment environment where
you should be more concerned with the return of your capital than the return on
your capital.
In other words, a big challenge that’s not going away in the
foreseeable future.
It also means recalibrating the private/public debate toward more
cooperation and less confrontation because most people, at least those without
an ax to grind, believe that the health of the American economy increasingly
depends on enlightened government action.
“We think the coma will last for years unless government policy
changes to re-stimulate the private sector and bring unemployment down,” said
Bill Gross, Pimco’s co-founder, in an interview with The New York Times last
month.
He basically favors a second stimulus focused on infrastructure
improvement, clean energy and job training, something that the Obama
administration would have great difficulty selling politically right
now.
Take climate-change legislation, the failure of which in Congress
this session prompted an exit of clean energy investment dollars in the United
States from Deutsche Bank to other parts of the world — and this dismissive
response from Kevin Parker, global head of asset management: “They’re asleep at
the wheel.”
At the ground level Americans have been living the New Normal for
two years now. The savings rate in June was more than 6 percent (it was
typically between 1 percent and 2 percent prior to 2008), and they saved $400
billion more last year than they did in 2005.
In a low-growth environment the impact on gaming revenues has
obviously been felt.
As for the demand characteristics of this
reshaped consumer market, beyond finances, some perspectives that make sense
are beginning to emerge, and there’s some good and bad
news.
Vacations, it seems, are in, but buying things is out. “It’s
better to go on a vacation than it is to buy a couch,” Elizabeth Dunn, a
psychology professor at the University of British Columbia, who researches the
issue of consumption and happiness, told the Times. She said that spending
money for an experience — concert tickets, French lessons, sushi-rolling
classes, a hotel room in Monaco — produces longer-lasting satisfaction than
spending money on “plain old stuff”.
That would seem to give a place like Las Vegas a fighting chance.
At the very least it explains the phenomenon of respectable visitor volumes and
falling gaming revenues (and the typically dead atmosphere at high-end retail
boutiques this summer).
The Times further writes: “According to
retailers and analysts, consumers have gravitated more toward experiences than
possessions over the last couple of years, opting to use their extra cash for
nights at home with family, watching movies and playing games — or for
‘stay-cations’ in the back yard. Many retailing professionals think this is not
a fad, but rather ‘the New Normal’.”
“I think many of these changes are permanent changes,” said
Jennifer Black, president of the retailing research company Jennifer Black
& Associates and a member of the Governor’s Council of Economic Advisors in
Oregon. “I think people are realizing they don’t need what they had. They’re
more interested in creating memories.”
So there it is, a glimpse of light for the gaming industry, and
not just for Las Vegas. Anyone in leisure entertainment is selling an
experience. The winners will be determined by the amount of customer-focused
creativity they can advance at the ownership and property level. They’ll be the
ones who elevate that statement from stale cliché to an ever-evolving and
meaningful reality.
Charles Anderer
is executive editor of BNP Media Gaming Group and also oversees content development, sales and marketing for the company’s trade shows and conferences, which include Bingo World, Southern Gaming Summit, Gaming Technology Summit, New York Gaming Summit and Casino Marketing. He can be contacted at andererc@bnpmedia.com.
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