The Good News About Bad News
Pity the poor economist. Like the weatherman of yore, his job is to predict the future of poorly understood, dynamic systems with imperfect tools. Pity the rest of us, too. Whether to dress for showers or sun is important but unless you’re stuck in Seattle or the Sahara, it’s not nearly as important as to buy or sell, hire or, ahem, strategically realign the workforce to optimize the business.
Of course looking out the window and seeing what the sky looks like is always an option. And it’s often a better option. Fortunately, businesses seem finally to be doing that themselves. Though June was a bumpy ride for the market, the oil industry and the Gulf, and despite Ben Bernanke’ uninspiring performance before congress yesterday, July’s results suggest that businesses across the US and the eurozone have noticed something we’ve been seeing for some time. Good weather.
Take a walk down your local main street, particularly if you’re not in a big city, and you’re likely to see fewer window signs offering commercial space for rent. In windows empty in January, you’ll probably see a fair sprinkling of new businesses. That’s good news. Look in the window (or website) of your local real estate shop. You’ll see good properties selling at good prices. Not 2008 prices, but good, fair prices. Most importantly, go to your local restaurant, coffee shop, movie theater or concert hall. You’ll find people, and fewer empty seats.
People are spending money. It’s still cautious, but they’re spending. Small businesses are nearing capacity and starting to hire. “Capacity” is relative—many had cut back so staffing’s not what it once was—but the important thing here is that capacity will need to grow. People are spending real money buying homes without one-off Federal subsidies. That’s a long-term optimistic bet on themselves, their jobs, and the economy. It says, “we’re here to stay, and things are improving. And finally, businesses are hiring. The numbers are still far from where they need to be. 464,000, today’s weekly jobless claims number of is still shockingly high. And it would be great if the Congressional extension of jobless benefits didn’t feel like such an urgent need.
But look outside. Even better, take a walk around your neighborhood. You’ll see evidence of a small groundswell of hiring. Rain or shine, we’ll be fine.
Posted on 22 July 2010 by David Kippen
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