So have you identified where your demand is at?
It’s always interesting to hear Federal Reserve presidents speak about the economy. Most everyone has a hard time understanding what they are saying…much less what they are going to do. But on Tuesday October 19th, several of them spoke in a language that most of us can relate to. For example:
- In airplane speak: “The economy is running at or just above “stall speed” according to Richard Fisher, Dallas Fed President
- “There are some questions that might be answered on the surface come Nov. 2nd and 3rd.”
- For more about the Federal Reserve meeting this week, click here
Given the Feds uncertainty, we can safely say that for some, 2011 will continue their double digit growth, whereas others will hold their own but some unfortunately will fail (either be acquired, go into bankruptcy or walk away from their business). See, being an economist is easy … everyone can have a crystal ball!
The Bank Issue
Many business people are hearing that there is plenty of money in their local banks (although much of it isn’t available for borrowing) and many manufacturers have become more efficient than they have ever been. Manufacturer productivity is at an all time high. Which begs the question “Why don’t they manufacturer more product to ‘prime the pump'” so to speak?
It takes money to buy products and that in turn relates to people being able to have a job to be able to get paid, so that they can buy products or for companies to get loans ( to use for working capital or expansion) to invest in their business. If companies are investing, jobs are created. If jobs are created, there is product demand. It’s a simple equation, unfortunately a difficult challenge and economists (including the Feds) don’t have the magic wand. Many feel that pumping more money into the economy (lower interest rates and buying bonds) is the answer since banks are the recipients. But banks aren’t lending that much.
Earlier this week on ElectricalTrends we shared some figures from the R W Baird and MDM 3rd quarter review, about the increase or decrease in the overall markets prediction for 2011 (read the post by clicking here).
While some distributors say they are de-stocking to a certain degree, others are turning over, and increasing, their inventory to bring it to current demand levels or ensure they have the “right inventory”. Which begs the question of how does one determine demand in their specific market place? Maybe that’s a question for another day. But demand has to be there along with money and jobs.
Since the politicians (Washington) and the economists (Federal Reserve) don’t have the answer, what do you think the answer is?
7 Comments
You are right about IDing demand. But the overiding factor for us is jobs….that will eventually create demand.
As far as industrial expanding, we just don’t see it in our area.
New Resi is in the ditch. Refurbish holds some potential.
Big project business is just not there.
We plan to limp along during 2011.More of the same from a ED in Redneck Country PA.
I can’t think of a time in recent history when so many sweeping changes have been made in such a short time period…not to mention a severe economic downturn on top of it.
Demand isn’t the issue. Demand is there…Supply is there, but uncertainty is putting a lid on everything for the time being.
Is the Fed going to inflate the currency to the point it is worthless?
Is Obama going to tax breathing and other forms of carbon dioxide?
Are the bush tax cuts going to be extended for everyone?
Obamacare will increase Healthcare costs, but by how much…
All of this uncertainty on the cost side of the business will put a damper on investment activities because companies just don’t know how much they’ll have left to invest and expand.
Aside from the quality of health care being lowered, the size of the country’s debt being unsustainable, my Grand kids will inherit a $34,000 debt(I an ashamed and sad), currency being devalued…what else could go wrong? Plenty.
We have a collection politicians that obviously have never ever held a job(in the real world), started or run a business or actually created jobs that produced worth that spending tax money like there is NO tomorrow. At the present rate of spend…there will be no tomorrow.
Tax payers in individual towns, states and regions have to make some decisions about what services their governments should provide at 2007 tax levels.
ENGAGE LOCALLY
EXPERIENCED business people should foster and mentor people to start businesses that will provide jobs, goods and services in their local area. Get the word out in your local community. Business people need to get engaged at the local level…like right now.You don’t necessarily need to invest money, but you have business knowledge that can help foster growth for people that have lost their jobs, but they have a burning desire to strike out on their own. Many feel they have too.
An one hour an evening will not overload you…but you might be surprised at what can happen. I suggest we all get engaged.
This is from just a guy who has worked for manufacturers and still owns a distributorship.
There probably will be some changes made after the upcoming election. How soon those changes will be made is another question.The other question is at what price will those changes cost.
I don’t see that I have an answer to the overall economic problem for the nation.
What we do know is that about 1/3 of our employees are endanger of loosing their houses and a similar amount have credit card debit that is about $5-$15,000+.
We still stay focused on three niches and will make it.
Current demand is OK, so long as Rexel doesn’t go crazy by chopping the bottom out of the market. Doesn’t Rexel understand how to make a profit? Apparently not!
The swiftness of the government changes and the fact that details are just now coming out, has sure put the squeeze on several projects that involve public money. People in my trade area have become very leary fo what they hear on the news and what is actually going to happen.
By the way we never saw the first dime from the stimulus package.
We have finally realized that this “economic” turn around will take at least 6-7 years.
With all the spending that has been going on by the Feds…we haven’t see much of it.
We are seeing a wave of hamburger/sandwich joints and motels. With in the last two months we are starting to see retrofits.
Our major concern is that we stay on top of our inventory and keep it as lean as possible.
As to the nation and getting the economy accelerated, spending money we don’t have just doesn’t make sense….but then what do I know. We are a 4 branch electrical distributor.
Here is what I think will help us get on track:
1.”Bribing” the voters with their own money has to stop right now.
2.Our unstable government has to stop spending.
3. NO MORE DEBT!
4. Corporate headquarters are being moved out of the country because of Washington and the unstable policies.
5. Health care cost will rise. Grade School: add 31Million people to health care, keep the same number of Doctors, cost will rise.
Take a quick look at what some business people are doing:
http://www.infowars.com/steve-wynn-takes-on-washington/
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