A slew of economic indicators out this month don't portend well for the U.S. economy. Many economists are uttering the "R" word, but it is noteworthy that many are preceding it with "mild."
An overview: While industrial production increased this month, for the quarter it fell slightly. Housing starts plummeted nearly 12% in March, and 37% from last year at this time. The Institute for Supply Management's monthly purchasing managers' report on manufacturing continues to indicate contraction in the sector. Oil prices continue to skyrocket, and prices at the pump are following suit. (Take this brief survey on the impact fuel costs are having on your business by clicking here.)
A study issued by the National Small Business Administration of small and mid-sized businesses found that 71% of those surveyed have a negative outlook on the economy this year as compared with just 45% with a negative outlook last year. Is this the result of the media's focus on the negative, or has the housing slump really brought the U.S. economy down?
However, not all optimism is lost. The NSBA survey found that nearly half of all small-business owners surveyed expect a flat economy, and 9% even expect economic expansion. And though 55% of business owners surveyed said they had some difficulty securing credit over the past six months, 70% were able to obtain the financing they needed to grow. (Here's an executive summary of the NSBA study, with the full study available at www.nsba.biz.)
In a recent blog post by Pembroke Consulting's Adam Fein found here, he outlines ways you can navigate the downturn, including making strategic acquisitions, improving employee productivity by investing in technology, improving productivity by reducing headcount, focusing on customer profitability, diversifying end-markets, and exploring exporting – a stronghold in the economy today. (Fein gave a good overview of the economic outlook in this MDM audio conference; order the CD here.)
In any industry, there seems to be a best practice among market leaders to pay attention to what their competitors are doing but not allow themselves to be absorbed by it because in the end they have little control over what their competitors do.
In a similar vein, in today's economic climate, it seems business leaders must stay aware of what is going on in the economy and in the markets they serve, but they cannot allow themselves to be overwhelmed by the onslaught of negative economic data. As Fein illustrated above, there are niches in the current climate where companies can gain a foothold so that when the downturn passes, they will be a clear step ahead of competitors.
Find economic indicators, updated monthly, at the MDM Databank.
