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!”