When will this economic downturn end? When will our economy recover? When will business activity pick up? When will our businesses start growing again? These are tough questions that require research and attention; unfortunately, not much is gleaned from the neighborly exchange of, “How’s business?”
We’ve been in a recession for 17 months now, since December of 2007, watching business activity measures steadily decline and unemployment figures steadily rise. In the financial markets, investors tend to adopt the herd mentality of bulls when the market is on an upward trend, and bears when the market is on a downward trend. Most businesses have taken a very cautious stance trying to survive the upheaval or are actually retrenching, a victim of market conditions.
There has been much speculation about when the economic indicators are going to turn around; however, the news has not been good until recent months. Two well-known and important economic organizations have released findings that suggest that the recession is ending or is heartily on its way!
Macroeconomic Advisers (MA) is a St. Louis-based consulting firm that compiles a monthly GDP (Gross Domestic Product) index for its clients, including portfolio managers, analysts, planners, treasurers, and economists at some of the world’s most prestigious government agencies and companies. In July, they reported that second quarter GDP was tracking at a negative 0.1 percent and that the third quarter was tracking at a positive 2.4 percent growth.
Another organization, the noted Economic Cycles Research Institute (ECRI), an independent institute dedicated to economic cycle research based in New York, suggests that three indicators demonstrate that the economy is about to recover. They call them the three Ps. The first P is for a pronounced rise in the leading indicators. The second P is that the pronounced rise persists over three months. And the third P is that the pronounced rise persists over three months and that it is pervasive, meaning that a majority of indicators are moving in the same direction.
According to ECRI, all three indicators are on the upswing and have been growing since February 2009. (Just so you know, the long leading indicator index does not include stocks or employment levels, but does include credit, housing, productivity and profits.) ECRI claims the recession is ending this summer and that it may already be over! Fortune magazine says about ECRI, “No one speaks with more authority on the economy’s turning points.”
There will admittedly be some skepticism and doubt about these projections. Unemployment will probably keep rising, yet at a slower rate, and it may even be a largely “jobless recovery,” as the economists term it. This recession is likely to be one of the longest and harshest in our history. Employment growth will come back very slowly and the recovery itself will take time.
This recessionary experience has focused us all on what is really important, both in our personal lives and in business; to be successful, we need to be more thoughtful and deliberate about our future. Hopefully, these past few months have given us a better sense of what is essential to run our businesses and some sense of how we might expand on our strengths. Innovation is a key factor. Now is the time.
Together we should seek mutually beneficial strategic alliances amplifying each others’ strengths, building an even stronger business community. It is time to take an affirmative step forward, to shake off that reactionary funk, and to get on with commerce and trade.
So, instead of waiting for the herd mentality to turn bullish, it is high time that you lead your business back to growth! Take the reins of your company and pick up the pace. You have been holding your fire or sitting on the sidelines for over 17 months. Your recovery will come faster if you lead the way instead of waiting for trends to carry you upward. You can make it happen. Liven up! It’s time to get back in the game!