The 2020 Mid-Year Economic Update_long

Commentary: A Positive Spin on News in a Negative Time

In a short time, we have grown accustomed to reading (and in my case, writing) articles and headlines filled with words like, decrease, "decline" and "fall." That's why when, as reported this month, housing starts saw a slight increase, and new orders for durable goods went up, the words "unexpectedly" and "surprising" started to appear. Confidence went up, at least a little - badly needed in our battered economy.
 
That said, as soon as the word "increase" and all its synonyms came back, however briefly, there were plenty of economists and analysts ready to moderate our excitement that things might finally be hitting rock bottom. "The modest signs of stability in the U.S. economy are ...

In a short time, we have grown accustomed to reading (and in my case, writing) articles and headlines filled with words like, decrease, “decline” and “fall.” That’s why when, as reported this month, housing starts saw a slight increase, and new orders for durable goods went up, the words “unexpectedly” and “surprising” started to appear. Confidence went up, at least a little – badly needed in our battered economy.
 
That said, as soon as the word “increase” and all its synonyms came back, however briefly, there were plenty of economists and analysts ready to moderate our excitement that things might finally be hitting rock bottom. “The modest signs of stability in the U.S. economy are early and could be attributed to one-time factors,” says one Manufacturers Alliance/MAPI economist. Another MAPI economist says: “These negative forces are a lot to absorb, and it is too early to see a turnaround in the industrial sector.”
 
Not to mention global economies are following the U.S. lead, including emerging economies that once stood as a bulwark against slowdowns, posing a risk for U.S. manufacturers. But some economists have moderated their negative outlook with comments that while things aren’t likely to turnaround soon, at least the economy is declining at a decelerating rate.

We are going to hold onto that positive outlook, at least for the next few paragraphs. Despite horrible conditions in many parts of the country, some distributors are searching for markets that might not be suffering as badly, or opportunities to partner with customers to at least stanch the blow through better channel management using better data.
 
Inventory management through programs such as Vendor Managed Inventory or integrated supply as discussed in the March 10 issue of MDM continues to be a strong differentiator for distributors who have seen growth (or no decline) in these areas. In this uncertain climate, opportunities exist to partner with customers who are also looking to improve cash flow.

Opportunity exists elsewhere, as well. The stimulus bill recently passed through Congress has received mixed reviews, but it holds $200 billion in direct and indirect spending that could benefit wholesale distribution companies with most spending to be done by 2011, according to Adam Fein of Pembroke Consulting. Government spending on infrastructure is one example.

Fein has put together a Webcast on opportunities for distributors in the stimulus package. You can order it online at www.mdm.com or call us at 1-888-742-5060.

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