Signs of a Bad Economy

I realize that today falls roughly in between Christmas and New Years, but it has been an unbelievably slow day at the office. I had a ridiculously easy commute this morning, even easier than my usual easy drive. Even though I work in an office right next to a very busy major thoroughfare in a fairly urban section of town, traffic that I can see from my window has been less than half as busy as usual. Amongst other responsibilities, I cover the phones, and there is usually at least one call every 20-30 minutes, but today it's been more like one call every two hours. It was like this on Friday, and it will probably be like this again tomorrow.

Traditionally, the week between Christmas and New Years is admittedly less busy than usual, at almost every job I've ever had. But this time around is almost spooky in the big drop in activity.

Now maybe everything will come roaring back to life this Friday, on January 2. But maybe not. Maybe we're facing an economy that is sputtering badly, and will soon result in lots more unemployed people.

My own job is in some danger. The small company that I work for got a new CEO last summer, and he's a little reckless with spending money. He gave out a bunch of raises when he took over, and then hired two new really expensive employees (out of a total of 12 people). We need to increase our revenue this year from $1.7 million to about $2.7 million if we want to make even a small profit. It's somewhat plausible, we are in serious discussions with a new client who wants to do about $1 million in business with us in 2009, so if all else goes okay, we will hit the target and possibly even blow past it. If we don't close that deal, or something like it, we will probably get shut down by investors next July.

What signs of a bad economy do you see? I'm not talking about the obvious stuff that's in the headlines, but stuff around you, where you live or people you know.

In my field, academics, I am about to go on the job market this summer and shortly thereafter finish my PHD, hoping for a tenure track position.

Unfortunately, looking at the job openings, many states have hiring freezes on. Hell, even Harvard lost enough out of its endowment to have a hiring freeze. Other positions are closing with no offers, probably because of the economy. I dread to see how many positions will be open next summer, based on what I know about the state of State budgets around the country (where a great deal of funding for colleges comes from, obviously).

I don't know how states adjust their estimates of tax revenues based on current economic activity. But smart people in at least some state governments are probably aware that while taxes from 2008 activity will be down, the taxes from 2009 will be even worse. I studied governmental accounting methods a long time ago, while I was still in school, but they didn't get into nuts and bolts detail about economic forecasts with respect to state budgets.

Here in Minnesota, we used to have pretty decent cash reserves for the state to draw on during time of crisis, but Jesse Ventura gave back most of that money to voters as "sales tax rebates." I personally got a few hundred bucks from those rebates. But now Minnesota is one of the 30 states looking at the possibility of our state unemployment fund going broke soon. It's already happened in Michigan and Indiana.

Yep, Governor Hockeyhair just emptied what little of Minnesota's reserves that were left to help plug the budget gap.

Fan-tastic.

Traffic is still very light today, here on University Avenue. Normally, it's almost as busy as one of the major local highways, at least during the workday. And the phone has rung just once so far, and that was a scheduled bi-weekly phone call regarding payroll.

America needs to get back to work.

I'm pretty fortunate that I work for a company that supplies the R&D end of the auto industry. We are currently pretty busy through about May or June of next year but we are seeing a couple of orders that are being put on hold. for the most part, I think we will be okay and we are also pretty fortunate that GM and Chrysler are not our major customers.

Shellhead--uh, do you live in Champaign-Urbana by any chance?

I know of course that a million cities have very busy University Avenues, but it's worth a fucking shot...

Gary Sax wrote:

Shellhead--uh, do you live in Champaign-Urbana by any chance?

I know of course that a million cities have very busy University Avenues, but it's worth a fucking shot...

Nope, although I used to drive through that area when visiting my parents in Saint Louis. No, these days I live in the Twin Cities. Most street names here change when they cross the border between Minneapolis and Saint Paul, but our University Avenue retains it's identity for a really long stretch starting in the northern suburbs, all the way through the Minneapolis campus of the U and then straight east through Saint Paul.

We're (LA) becoming a state of negative growth, population wise. We're also getting hit with budget shortfalls for reason: Falling gas prices. So far, the state has plans for a $341 million dollar budget cut through laying off workers, reducing health care, and higher education unfortunately. Laying off state workers is long overdue from my standpoint. We're one of the states that ranks with the most amount of employees.

As for my job, I'm in legal defense. It's relatively safe. I say "relatively" because in my experience, no job is bulletproof, regardless of economy.

The sign I've noticed of a bad economy today is on TOS there was a thread bitching about the FFG prices and the majority of the posts were defending the higher costs or were at least accepting of them.

From the job side, I work in signs. Things like store identification signs and shopping center tenant signs. So in my area I have a pretty good grasp on the local market in terms of new stores coming in and stores closing down. A lot of big box stores (Circuit City and Linens-N-Things) as well as car dealers are closing. Lots of major shopping centers cannot draw large anchor tenants and thus have a hard time drawing in mom-and-pop local companies that fill up the 20-40' storefronts next to those larger 20k sq ft anchor sites (which are really the bread and butter of any local economy). Some of the newer shopping centers and industrial parks have 50-80% vacancy rates (those would be the newer shopping centers, not some established strip centers). Overall new or expanding businesses have just stalled out.

Next time you drive around your area look at the new development and outside of some of the very major centers for your metro area and you'll see a lot of sad, empty storefronts...and they'll be like that for a while until banks start loaning out money again for small businesses. We just had a good size development finish up in one of the suburbs in my area in a high profile location which was anchored by Circuit City. Now the center is complete. It has no anchor site and not a single tenant has moved in yet.

LvT

Interesting comments LvT.

Americans still haven't gone back to work yet, at least not en masse. It's morning rush hour right now, and University Avenue only has slightly more traffic than it would on a Sunday morning. Apparently January 2 is a new semi-official holiday. My goddamn co-workers are mostly missing in action, too.

This just supports my theory that America is starting to slowly circle the drain. There won't be an apocalyptic collapse of our society, but the overall quality of life will start to decline. And things won't get better until our over-priced labor drifts down to a level that is competitive in a global labor market. This country became great, in part, due to hard work and creativity, and I just don't see a lot of either of those qualities these days.

Are Americans really supposed to work for a dollar an hour? The reason Indians and Chinese can work at those wages is because a dollar (or equivalent) buys a lot more over there than it does here. I've worked for $8 an hour, under the table, which is a relatively good wage, and the only way you realize how little that buys is when you're making it yourself (working erratic hours, I ended up at the end of the week with about what you could get in welfare for the same time period, not that I am willing to take welfare). Even if it got to the point where american office workers were making minimum wage they still would cost more than Indians.

The idea is that Americans are more productive than Chinese or Indians, so justifying their higher wage. American wages are already low compared to Western Europe and Japan.

You can compensate for lower productivity per hour by working more hours (as Americans do compared to western Europe, and Indians and Chinese probably do compared to Americans).

The areas where American labour is most threatened is in areas where skilled labour is less of an issue, as in basic manufacturing, and basic services. Where unskilled labour can be replaced with mechanisation, the production will stay in the US, otherwise it flows to lower wage countries. Or lower wage workers flow in to the US.

All this didn't seem to be a problem when it was manufacturing jobs in rust belt states, but now it also affecting IT businesses and the middle class, suddenly America wakes up.

Of course the US can go back to its traditional protectionism. It worked in the 19th century, but then the US was still catching up and everybody else was still playing fair. It created disaster in the 1930s when everybody turned protectionist and world trade collapsed.