Wednesday, April 28, 2010

Exploiting the business cycle

The federal reserve has announced its quarterly outlook, and decided not to change Interest rates.

The terse statement can be read here.

The press release mentions as little as possible, but one thing it mentions is “Business spending on equipment and software has risen significantly” while spending on construction is still depressed.

This is what you expect from the “business cycle”. Unemployment stays high after every recession. Instead, companies produce more with the same number of workers by increasing worker productivity. In other words, businesses invest in capital equipment (e.g. robots) and software to make workers more productive. It is this increase in worker productivity that causes the relative wealth of our country (and the lack of productivity is the cause of poverty in poor countries).

What does this mean for us computer geeks?

It means that the time to start a company is often at the bottom of a recession. Because of layoffs, it’ll be easier to find employees. You busily develop your product during the recession, and then release it as we come out of the recession – at precisely the right point of “significant” investment in software/equipment.

The same applies to security geeks. Our skills are too specialized to fit as normal employees in a lot of companies, so a lot of us are consultants instead. During the uptick after a recession, companies don’t like increasing their payrolls, but they will hire consultants. Right now is (theoretically) a good time to be a security consultant.

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