Risk aversion slows recovery.

• Position: The Economy

Risk taking--a vital ingredient to the last economic revival in the mid 1990s--appears to be lacking during this recovery, particularly among job seekers, maintains John Challenger of the international outplacement firm Challenger, Gray & Christmas, Inc., Chicago. This deficiency could impede employment gains. Relocation among job hunters is down 39% from recent highs; business start-ups are 30% lower; and the willingness to change industries is nearly 10% off from 2002.

"Combine these declines with the fact that corporate spending on research and development and on new capital equipment has been slow to increase and you have a picture of a risk-averse economy that is destined to stagnate," Challenger warns. "At a time when indications of a strengthening economy should be prompting people and companies to take more risks, they appear to be going in the opposite direction. This will not bring the recovery to a halt, but it will certainly keep it in the slow lane"

The percentage of unemployed managers and executives relocating in 2003 fell to an annual average of 13.9%. Despite the fact that the 2003 economy was much improved over 2002, that rate was down from 14.3% in 2002. Last year's average was 18% below the 2001 number and 40% behind the 2000 figure.

"Relocation has always been considered a risky but often necessary step to accelerate the job search. From 1991 to 1993, when the economy was recovering from the last recession, nearly one out of three jobless managers and executives [moved] for new jobs," Challenger notes. "The fact that relocation is currently more than 50% lower than during the last recovery stems in part from a post-September 11 desire to stay close to friends and family. It may also be related to the fact that many risk-takers got burned when the dot.com bubble burst."

Other forms of risk-taking among applicants also have declined as well. The percentage of jobless...