Avionics News February 2012 - 43

It’s manifested itself in many ways, such as persistent high unemployment and low consumer confidence, and has no respect of political boundaries, as anyone watching the European Community these days can attest. Even though economists strictly maintain the recession ended in the U.S. in mid-2009, when the country’s gross domestic product reversed its downward trend, the results don’t feel like recovery for millions of workers and small business people throughout the world. Anything associated with macroeconomics quickly gets complicated for the layman, but according to a 2009 study by the Federal Reserve Bank of St. Louis, the current economic doldrums have their roots in financial crises, “episodes during which there is widespread disruption to financial institutions and the functioning of financial markets.” Among the study’s findings are two elements common to the current economic situation: 1. Recessions associated with financial crises have been more severe and longer lasting than recessions associated with other shocks. Recoveries from such recessions have been typically slower, associated with weak domestic demand and tight credit conditions. 2. Recessions that are highly synchronized across countries have been longer and deeper than those confined to one region. Recoveries from these recessions have typically been weak, with exports playing a much more limited role than in less synchronized recessions. To arrive at its conclusions, the St. Louis Fed looked at a wide range of historical data, dating from 1929, the Great Depression’s beginning, and how countries as diverse as New Zealand, Italy, Japan, Sweden and the U.S. were affected. These two elements, cited above, certainly aren’t reasons to rejoice but should help us begin to understand where we have been, where we are and, most important, where we are going. So, just what will an overall economic recovery look like for the worldwide avionics industry?

You Call This A Recovery? According to an October 2011 report from the U.S. Census Bureau, household income has declined more in the two years since the recession officially ended than it did while it was ongoing, even though the U.S. economy has grown since mid-2009. An obvious result is what Census Bureau report writers Gordon W. Green Jr. and John F. Coder labeled “a significant reduction in the American standard of living,” according to the New York Times.

Given the economic downturn’s duration and depth, it’s no surprise a majority of survey respondents (to the AEA’s Rate & Labor Survey) believe economic conditions are negatively impacting their business.

While the average U.S. household isn’t in the market for advanced avionics or pitot/static system recertification, the Census Bureau’s estimated 9.8 percent decrease in income during the two years since the recession’s beginning translates into reduced demand for all goods and services. If John and Mary Doe aren’t buying a new dishwasher this year, appliance manufacturers and everyone in between aren’t stroking checks for glass panels or new business jets. When the Aircraft Electronics Association asked its membership for an outlook on business activity as part of the association’s 2011 Rate & Labor Survey, results indicated member companies seem to have accepted sluggish economic growth as the new norm. “The comments received from this year’s Rate & Labor Survey are a sign that our members have to clear even more hurdles to reach their business expectations,” AEA President
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Avionics News February 2012

Table of Contents for the Digital Edition of Avionics News February 2012