13 Signs the Economy Could Be Faltering
(This post originally appeared on Inc.)
The most successful business people I know share the same two characteristics: They’re always optimistic, and they’re always terrified.
Optimistic because to run a business, inspire people, keep things on track and lead teams to success you always have to have a glass-is-half-full attitude. It’s what keeps people happy, create confidence and gives others purpose towards a goal. Terrifiedbecause we know that the more we know, the more we don’t know. Hence, the more we fear. There are always things that can go wrong. There are always factors outside of our control that can hurt our businesses and kill our plans. So, while optimistic and happy, we’re always keeping an eye out for the dark clouds.
And some are seeing dark clouds in the economy. Want some examples? Here are 12.
1. Big companies with flat sales
Excluding energy, America’s biggest companies now expect that sales will be flat in 2015, according to a consensus analysis by a Goldman Sachs analyst. Hey, you 99-percenters: careful what you asked for. I don’t like those snot-nosed Wall Street kids making $500,000 a year out of grad school either. But when big companies don’t grow, the ecosystem of small and mid-sized companies that rely on them for business also suffers.
2. Fewer Big Mac feasts
American Airlines reported a decline in traffic and McDonalds suffered a decline in global sales last month. I can certainly relate to people wanting to avoid getting into an airplane, but what kind of horrific suffering must the world be facing to cut back on Big Macs? You know that’s a bad sign.
3. A key sea shipping index down
A carefully watched shipping index has fallen to its lowest level…ever. That’s the Baltic Dry Index, which measures shipping prices through the Baltic Sea, a place that I would be challenged to find on a map but where I’m told has the world’s busiest traffic. When prices go up, it means more demand for shipping and indicates global growth. But not now. Not good. C’mon, you Baltics…get it together! The world needs you!
4. Shaky markets
A research firm is predicting a market drop that will be much, much worse than in 2008. And they’re not alone. Many Wall Street analysts are concerned about the recent wild fluctuations in stocks and are worried about a growing bubble in both the bond and stock markets. A hit to my personal wealth will certainly be a blow to that one professor whose salary I’m supporting through the three college tuitions I’m paying for my kids this year (but don’t worry, he’s got puh-lenty of pension built up). But, more importantly, a hit to my customers’ wealth means they’ll buy less from me. It’s all confidence and psychology, of course. And that what worries business owners.
5. Anti-business sentiments
Overall, the world has less faith in its businesses today than it did a year ago, according to a new report. No one can deny the growing popularity of…well…populism, the concern for the middle class, the growing gap between rich and poor, the comments that Kanye West made about Beck at Sunday’s Grammys (and for the record, Beyonce really, really did deserve the best album award) and the mounting hostility toward the corporate world. This leads to greater regulations, increased government oversight and more unwashed 22-year-olds going to sit-ins and sleeping in parks, which is just gross. None of these are good ingredients for economic progress.
6. A widening trade deficit
Global currency issues, particularly the strong dollar, are pushing foreign customers to look for alternatives to U.S. made goods. Hence, our trade deficit widens. Meanwhile, a flight to London from Philly is still a fortune. Go figure.
7. Slowing job growth
8. House of Cards
U.S. nonfarm productivity braked more sharply than expected in the fourth quarter. And with the third season release of House of Cards scheduled for the end of the month on Netflix, nonfarm productivity is expected to drop even further this quarter too.
9. Cheap oil
Oil prices are in the dumps. And while we all enjoy lower prices at the pump, let’s not forget that America has recently found itself to be one of the leading producers of oil and natural gas in the world and the sharp decline in prices has negatively impacted millions in the energy industry. Firms are cutting back. Profits are declining. And some are even predicting a recession for oil hubs like Houston, a city that has to suffer with the Astros every year and has little capacity for more disappointment.
10. Fewer UPS deliveries
UPS had a fourth quarter that was just as terrible as the company said it would be. A decline in shipping means a decline in overall economic activity. On the good side, it means we see less of those guys in those brown uniforms who keep drawing glances from women.
11. Major layoffs
Radio Shack declared bankruptcy and layoffs were recently reported at eBay and Paypal as well as Cargill, Coca-Cola and General Mills. Granted, these are the result of poor management, consolidations, general business decisions and a commitment by me to never buy anything at an online auction ever again because every time I think I’ve won some dude swoops in at the last second and scoops up my item. But even though there are explanations for these layoffs, it still raises the question if they would be happening in a stronger environment.
12. The rest of the world isn’t doing so hot
Russia’s economy is faltering. China’s economy is slowing. Europe’s economy is stagnating. OK, it’s so tempting to say Nyah, Nyah…we’re better than you losers. But that’s not mature (even if it is partly true). More importantly, we must trade with these people and when their economies suffer, it has a negative impact on ours.
13. GDP is growing, but not enough
GDP is expected to grow in 2015, but perhaps not as much as before. So another year of slow but steady growth. We’ve yet to see a solid rebound from the recession. Or from Kobe this year. But that’s another problem altogether.
Let’s take a breath. No, the world is not blowing up and the economic news is clearly not all negative. Interest rates and inflation are at historic lows. Job creation is strong. Small businesses are definitely hiring again amidst a seven year rise in confidence. Ford light vehicle sales were up 15.6% in January, beating estimates. And overallbusiness health remained steady (and the health of small businesses improved) in January according to a report from Dun & Bradstreet.
So as a business owner, I’m always optimistic. But as a business owner, I’m always terrified too. My dad always told me that “nothing is as bad as it seems, and nothing is as good as it seems” which is OK advice unless you happened to catch The Amazing Spiderman 2 which was truly as bad as it seemed. As for business, I’ll take the good news with the bad. I continue to hoard cash when I can. I’m draconian about keeping my overhead low. I’m careful with my investments. I’m trying my best to operate as if we’re about to hit another recession. Because, who knows, maybe we are. And although that terrifies me, I’m optimistic that I’ll get through that too.