In turbulent times, what is our survival strategy? Are things getting better or worse? Should we save, spend, or chuck it all and run for the Peaks? Reading today’s economy is not easy. Perpetual ups and downs, sometimes in the same week, demonstrate that the roller coaster has not stopped, even if these days it is more of a kiddie ride than the White- Knuckle Gigacoaster.
As recently as August, the U.S. Bureau of Economic Analysis reported a 0.5 percent increase in personal income in the United States ($59.3 billion) and the same percentage for personal disposable income ($52 billion). The New York Conference Board’s Consumer Confidence Index decreased in September, and then slightly increased in late October. Predictions for holiday spending are both up and down, depending on which reports you read. Investors.com claims that 2010 spending will increase three percent over last year. Deloitte also predicts that 2010 holiday spending will be “less frosty” than 2009. Teen spending increased eight to nine percent, according to personal finance website Wallet Pop, but early predictions for Black Friday were still looking “murky.” What does that mean for business entrepreneurs and individual consumers? With some pundits predicting another nine years before the U.S. economy comes home to the farm, it is hard to know.
“It’s very difficult to make decisions based on current information and data,” said Tim Kinney, CEO/president of Kinney Construction Services. “How do you make a business decision that hinges on the economy when you hear on the news that we are slipping into a second recession and we’re all going to drown and the very next day they report a huge increase? Our economy is at the mercy of public perception,” he added. What to do? “Keep your thumb on the pulse,” he advised.
“We are definitely in a save period,” said Anne Swanson, co-owner of It’s About Coffee. The company operates a restaurant on Steve’s Boulevard in Flagstaff and a roastery/coffee dispensary on Butler. “We had expected to see the economy turn around,” she said. When it didn’t, “we adjusted our goals and expectations.” Shorter business hours and a decrease in staff means the company can focus on what it does best: “breakfast, lunch, coffee drinks and coffee bean sales,” said Swanson.
For Kinney, “This is a spend period.” He has weathered the recession thanks to a “decent amount of work to keep us operating.” His forward strategy includes improvement, growth, and “a thoughtful (not a careless) spend. You cannot simply go with a cut-spending-and-stick-your- head-in-the-sand approach,” he said. “You must continue your business development and improve on your systems so you can compete.”
How do these Flagstaff businesses measure up to the national scene? Again, it depends. The New York Times reported in October that big U.S. corporations are “saving, waiting for the economy to perk up.” Unfortunately, they are doing it at the expense of government programs designed to stimulate the economy. Corporate giants like Micro- soft “are raising billions of dollars by issuing bonds at ultra-low interest rates,” the report said, “but few of them are actually spending the money on new factories, equipment or jobs. American corporations have been saving more money since the financial collapse of 2008,” said The New York Times, “but the economy is unlikely to perk up if corporations keep saving.” Even so, as of late October, the Reserve was contemplating yet another effort to stimulate the economy. According to The Washington Post, some industries (car manufacturing) seem to be on a roll, while The Wall Street Journal cited deep job cuts in others.
Save or spend? Kinney seems to have some good advice. “If we take the position that we have to cut all spending, we will lose,” he said. “Imagine if we stopped spending altogether. Every one of us would be out of a job. Then what do we do? We need to keep spending and moving forward and to increase the chances of coming out of this recession sooner.” FBN