How long can the good times last? As the post-crisis recovery stretches toward its tenth year, that’s become a subject of spirited debate. The bulls suggest that favorable tax policy and aggressive U.S. deregulation will spark growth indefinitely. The bears argue that fiscal restraint, a flattening yield curve and global trade tensions are signaling the expansion is waning.
Timing a recession is notoriously hard, but two things are certain: A downturn will arrive eventually and this recovery is defying the odds already; only one recovery on record (from 1991-2001) has lasted as long as a decade, and most peter out within five years. We also know that for corporate leaders, the timing of the next downturn is probably less important than the answer to a couple of simple queries: Are we prepared for the inevitable downturn? And will we wish we had done something different when we still had the chance?
Our research suggests that the eventual winners in any downturn are companies that aggressively captured the opportunities unique to recessions. Playing offense, in other words, almost always trumps hunkering down or trying to weather through. The data shows that winners in a downturn actually make more dramatic gains than winners do during boom times, depending on the shape of the recession.
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