Wednesday, December 3, 2008

How bad will it get?


What is happening in the economy? How does it affect small marketplaces and small business? I don't have a crystal ball, but I would agree with many economists that we are NOT even at the trough yet of this recession. Since it began in December of 2007, the average duration of recessions would suggest that we have more than 12 but less than 24 months. I submit that is still too short - we are already 12 months in with at least 8 more to go. We will likely see unemployment reach double digits (at least in California) and a continuing pressure against consumer goods. We will likely not even see the light at the end of the "tunnel" until 2009 Q3 - say September.
The photo to the right is symbolic for me in many ways, but it seemed particularly relevant to the economy. It was taken by one of my best friends - S. J. Carter http://sjcarterphotography.com/ How much pressure will it take for the American Citizen's heart to feel the agony that rampant consumerism and consipicuous overconsumption has wreaked upon our lives and our values? We need to begin to understand the way out of this economic hardship is not by spending more than we earn or creating greater debt, but by focusing on things truly needed rather than simply wanted.
I would advise all clients now to husband their resources, stay focused on their core business and expand only if the opportunity seems right for the next several years with current market conditions. Now is the time to be creating strategic alliances, batering for needed services and lowering aggregate overhead.

1 comment:

Jim and Marcia said...

I agree with Seth's perception that indicators are we will not start to see a recovery until late summer '09 and most likely into 2010. This past summer I met a couple in one of my open houses in Newport Beach, who make a living as investors in the marketplace, be it real estate, stock or whatever. They felt strongly we wouldn't see daylight until 2011. Of course hope springs eternal in the heart of a broker, so I am hoping we will see signs of recovery before then. Jim and I have cut back considerably with expenses, we have seen this downturn several times in our 30+years as real estate brokers. It is not pretty, not easy, but the focus and positive attitude are key to surviving. Go with the flow of cutting back on unnecessary expenses. The one star I see in the skies of depressions is that it forces us to reconsider what is truly important. So with the holidays upon us, we have decided to concentrate on spending our time and our money wisely: we want to be with a few good friends; with members of our family who also appreciate time spent together. To share good meals at home and create memories in the event and our conversations. The wellspring of love and comfort from these experiences, help to sustain us particularly when times are tough.
Great blog Seth ! Thanks for setting it up !
Seth, how do I change e mail address for responses?

Marcia