One of the most common questions I’m asked on my weekly radio show is, “Where is the economy going in the next 12 months.” Obviously if I knew the answer to that one I would be a very wealthy man. Perhaps exploring similarities and differences between this recession and past recessions might put things in perspective.

Just to put us all on the same page, a recession is defined as two consecutive quarters of negative GDP (Gross Domestic Product) growth. The current recession is supposed to have begun in November of 2007. It supposedly ended sometime around June of 2009 give or take a few months and depending on which “expert” you choose to believe. So why are things still looking a little dismal if the recession is truly over?

Previous recessions lasted, on average, about 18 months. When they ended there was usually robust growth afterwards. One reason we came out of previous recessions faster is that we didn’t have 24/7 cable news and the internet to remind us how crumby our lives were every hour on the hour.

In the 1980’s recession, unemployment was at 10%, home loans were 12-15%, and the prime rate was at 20%, but most people did not rein in spending as they are doing in the current recession. Mostly because we were convinced that the days of 6% mortgages, the average rate since the Civil War, had to end sometime so we were reluctantly ready to adapt to higher prices and less affluence. After all the good times couldn’t last forever.

To our great surprise and relief by the end of the 1980’s we had several years of growth and prosperity. We got inflation under control, unemployment came down, the stock market went up, mortgage rates came down and things nearly returned to where they had been before the recession.

Who caused it? The good ole American Public. Consumers continued to buy products and services with a concept created about 15 years earlier…the credit card.

They spent money that simulated business, created jobs, as we began to enter the computer electronics age. With the influx of computers, businesses became more efficient and products improved. Prices went up but you got more bang for your buck with many products. The Japanese carmakers put the pressure on American car companies to make better cars or go out of business. And many did. There is no longer Desoto’s, Ramblers, or Studebakers on America’s highways. And no one bailed anyone out…except Chrysler. Lee Iacocca went begging to congress and got some money but they also paid it back with interest. Something GM has failed to do as of this writing.

Fast-forward to today’s recession. What’s different? The United States is no longer selling to itself alone as it did in the 1980’s. Today’s market is global. The devaluation of the dollar has made American products more affordable in foreign markets. Companies that once sold only in the US are now finding customers in China, India, Europe and the Middle East that didn’t exist during past recessions. Foreign workers are more educated today than in the past so rather than make products here and ship them overseas they are building facilities where their customers are. I like to buy American as much as the next guy, but if I own stock in a company, do I really care where my dividend comes from?

Meanwhile, our leaders are still clinging to many outmoded laws that are causing the very problems that plague us. According to an article in the Wall Street Journal, “One of every three dollars a company earns is spent complying with or implementing a government regulation or tax.” If you add in all the other things that make us non-competitive with other nations around the world, like minimum wage, unions, wage and hour laws, OSHA, retirement plans, and healthcare costs, is it any wonder companies feel they have to relocate just to survive? Monies earned overseas and returned to the US are taxed at the second highest rates in the world.

So where are we headed in the future?

My best guess is that it’s going to get worse before it gets better. Government never seems to learn that interfering in the natural evolution of business is as dangerous as interfering with the ecosystems of oceans. There is a natural progression that business follows. In the next few months, unless unemployment is dramatically reduced, I think you will see government forced to take a seat on the sidelines and let business take over. I think we’ll see a moratorium on some regulations and some form of tax reductions on both business and consumers. If these things don’t take place then I would prepare for several years of hard times for young people looking for jobs and seniors having to rethink their retirement plans. I hope I’m wrong but based on past history I’m preparing for rough seas ahead.

Tom Egelhoff, www.smalltownmarketing.com, is the author of, “How to Market, Advertise and Promote Your Business or Service in Your Own Backyard.” Listen to Tom’s weekly radio show, “Open for Business, 11-2 PM Mountain Time every Saturday at http://kmmsam.com. Click “Listen Live.” Also, check out Tom on Twitter, Facebook and LinkedIn.