The stunning increase in job losses announced this week overshadow some cautiously optimistic reports. Are we turning the corner in this recession? It’s too soon to tell, but we are beginning to see actions that suggest consumers are turning from that ‘deer in the headlights’ fear to pursuing some genuinely great opportunities in the midst of the carnage around them.
“Just Do It,” to appropriate the tag line that has served Nike so well so long, is what we are beginning to see in the markets:
- Home Sales Rise. Sales of existing homes rose in December by 6.5% to a seasonally adjusted 4.74M units compared to an expected 4.4M units. While one month does not a trend make, clearing the market of foreclosed properties is the fastest way to stabilize the housing sector and restore confidence.
- Leading Economic Indicators Up. The Conference Board reported that leading indicators rose 0.3% in December beating the 0.2% economists expected. Weak employment and low building permits were offset by growth in real money supply and an improving yield spread.
- The Law of Averages. Economists tell us we are in the 13th month of this recession but that the average length for all recessions since the Great Depression is 16 months. Does that mean this one will be average? It appears we may know soon. History tells us once that bottoming out is reached we can expect to see an often abrupt rally—a kind of “YES! WE MADE IT! Signal that recovery is beginning.
The other lesson from history is that the sudden rally beyond that tipping point when it comes is THE BEST time to be in the market. So having ridden down your 401k values now is not the time to blink—it probably is the time to buy in anticipation of that law of averages.
So what does this wishful thinking mean for our business? It brings me back to a theme I can’t get out of my head—TIME IS NOT YOUR ALLY! If you are trying to position your consulting practice, or product development cycle, or business plan for the recovery ahead these leading indicators should remind you of that incessant TICK, TICK, TICK of the clock in the belly of the alligator that warned Peter Pan and Wendy.
Even those ugly job loss reports may be a good sign since rising unemployment tends to be a lagging indicator and when combined with the relatively good news means, perhaps, just perhaps, the law of averages is with us.
“ Just Do It!”
The lessons in church today were about light as a symbol of the Holy Spirit descending upon us to show us the way forward. They were fitting and appropriate for this week of celebration as Barack Obama becomes our President. I don’t know—or think, at least—that God has intervened to send Barack Obama to save us from our fiscal ruin. Although I know some who want desperately to believe that he has received “the call” for just such a purpose.
While Obama can not be expected to snap his fingers and fix our problems overnight, he does have the “big mo” and if he spends it wisely he can raise our spirits and re-energize our optimism about the future and thus re-enlist us all in the great American dream once again. Since financial panics and recessions are as much about psychology and confidence as about economics, Barack Obama can make a material difference in the depth and duration of this recession and our competitive advantage in the recovery ahead.
So my advice is cheer him on, wish him well—and pray for him next Sunday and each one after that—while we all roll up our sleeves and get focused on what we each can do to help him help us achieve the goal of a sound, successful, robust economic future.
Obama also has the “big mo” to do something few of his predecessors have been willing to do—ask us to sacrifice for the sake of a greater good, stronger American future, and better world. We’re already hurting, but will the endgame be memories of hurt or renewal and transformation. There is chatter about a “grand bargain” that integrates the economy, energy, and environmental issues in ways that improve our alignment and enhance the prospects for renewal. It feels to me as if America is ready for a “grand bargain” that is truly based upon a shared vision of the American future.
Obama has a chance to be a transformational leader if he rises above the current carnage in the markets and uses the money we are going to spend anyway to re-align our policies, strategies and psyche to drive that “grand bargain” into reality. He can also do this in a way that is bi-partisan and changes the tone in Washington from “gim’me” and “gotcha” to “attaboy” and “ah-ha!” A transformational leader who changes the tone and inspires us to renew the spirit of America would truly be a gift from God!