Rose Matlock Consulting

Archive for the ‘Economy’ Category

Questions have been asked about whether this recession, sometimes dubbed “The Great Recession” has in fact changed America and perhaps more importantly, changed our behavior as consumers.  If a new survey from Trulia.com is an indication…the answer is yes. Interesting facts:

1.  19% of respondents are more negative about homeownership than they were 6 months ago

2.  37% of American see their ideal home as being less than 2000 sq ft…big deal out here in the Southwest where homes have been built bigger and bigger

Change is not a negative in and of itself.  However, not recognizing change has occurred and then thoughtfully planning for it is.

The Bureau of Labor Statistics announced today that US employers had only lost a net of 11,000 jobs in November.  This contrast with the 110,00 to 125,000 that economist had expected.  From coast to coast and CNBC to Fox Business Network shouts of joy were echoed.  It also happened that President Obama had a scheduled speech in Allentown, PA to discuss the issue of employment and what the federal government might be able to contribute to help the situation:

“The direction is clear,” Obama said. “When you think about how this year began … today’s report is a welcome sign that there are better days ahead.” – USA Today

So, have we turned the corner?  Is this now the fast track to better days ahead?  Can we all come out of our collective bunkers and resume our ways of prolific spending, consuming and unmitigated economic growth?  Not so fast…

What is being little reported is that in the month of November, 100,000 people STOPPED looking for work.  The tricky thing about employment statistics is they are comprised of multiple pieces of data.  It is not an issue of straight arithmetic but instead an ever changing universe of potential jobs, current jobs, seasonal work, etc.  In this case, the improvement in unemployment is largely a result of a small cities worth of people give up the fight to find new work.  How is that a good sign?  Millions more are only getting part-time employment when they desire fulltime.  Overall, 8 million people have lost their jobs in the last 18 months.

Over and over, we have been told that the US economy is a function of consumer behavior.  Nearly 70% of it in fact.  How can we have robust GDP growth in the future, if we maintain a 10% to 11% unemployment rate into the future?  Perhaps an even more salient issue is how can we continue to consume when much of the last decade’s growth was a result of cheap money and lax lending?  The economy does not rebound based on the stock market or asset bubbles.  Instead, real increases in productivity and employment are supposed to be the pre-cursor to a run up in asset prices.  Price refelct an increase in value and that is not what we have been witnessing for the last 6 months.

American business’ need to continue to stay conservative in planning for cash flow and inventory.  Focus on getting he most out of what you have, exploit opportunities in the market when they present themselves but do not be lured by the siren song of Wall Street right now and its predictions of a quick recovery.

US Shoppers Spent Less Over Black Friday: NRF – Retail * US * News * Story – CNBC.com.

Well…guess we are still ina recession.  As you look to 2010, stay focused on cost control, effective use of current assets (hard and soft, i.e. – people) and maintaining liquidity.  As the next year unfolds, recognize the difference between Wall Street and Main Street (a gap that is bigger than ever) and plan accordingly.