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Can’t Shake That ‘Walking Pneumonia’ Economy

Posted by Larry Doyle on June 9, 2011 7:49 AM |

Have you ever had walking pneumonia? Not a lot of fun, right?

You might be able to operate but your inability to fully inhale is a real drag. I had a bout of walking pneumonia a few years back but was fortunate to get over it in about a month. If only our ‘walking pneumonia’ economy were just that lucky.

I first described our domestic economy as sufferring from this malady in early 2010 when I wrote U.S. Economy = “Walking Pneumonia”.

Going on 15 months later we continue to languish from a variety of factors that inhibit the flow of economic oxygen critical to a real recovery. While many ‘quacks’ would like to have us believe differently, let’s navigate and listen to those who write the checks which drive the oxygen into our system and propel our economic vitality. How so? 

A Duke University/CFO Magazine Global Business Outlook Survey was just released and the economic pleurisy-like symptoms persist. CFO diagnoses our condition in writing, CFO Optimism Is Down, and So Is Hiring,

Just 27% of U.S. CFOs say they are more optimistic about the economy this quarter than they were last quarter, while 36% say they are less optimistic, according to the Duke University/CFO Magazine Global Business Outlook Survey released today. When finance chiefs rate their optimism on a scale from 1 to 100, the results are less dramatic, though still down — 57 out of 100, down from 61 last quarter and roughly even with a year ago.

Did the palliative effect of some of Washington’s medication wear off?

“Three to six months ago, I definitely had a more positive outlook on the economy,” says Greg Gould, finance chief at SeraCare Life Sciences, a small publicly traded biotech company. “Now I’m a bit more worried that there could be some kind of a double-dip [recession].” SeraCare, which counts the National Institutes of Health as a customer, benefited from stimulus spending included in the American Reinvestment and Recovery Act. Now, says Gould, that impact appears to be fading.

Not all hope is gone though. Again we are talking about walking pneumonia here. You can still operate and get things done but do not look for a lot of help in the process.

Finance execs do plan to spend money in the coming 12 months, however. Capital expenditures, research and development spending, and advertising and marketing budgets will all grow, but by smaller amounts than CFOs reported last quarter. Tech outlays, however, are expected to increase by 6% on average, up from 5.5% three months ago.

Full-time domestic hiring will continue to be anemic, with finance chiefs saying they will increase staffs by less than 1% in the next 12 months. That number, also down from last quarter, means that unemployment will likely linger at its current rate of just over 9%. Twenty-one percent of CFOs say they are actively hiring, while another 16% say they are short-staffed but lack the resources to hire. Nine percent say they are short-staffed and would like to hire but are having trouble finding the types of employees they need.

Still, many are holding off on hiring as they continue to wait for the economy to improve. “People are hesitant to make a long-term bet,” says Gould. “I think with housing continuing to be unstable and with the continued high unemployment rate, people are going to continue to be nervous.”

How might we ultimately shake this condition and truly get back on our feet? Let’s stop listening to the quacks and go into the field and listen to the sage wisdom provided by a small business owner,

No surprises here. I’ve been a small business owner and manufacturer for almost 30 years. Better than half our products go abroad. This is – by far – the worst we have seen. Washington hasn’t a clue.

It’s not about throwing money at a problem. It is about taking less money at the front end (taxes)and letting business’ have more to grow with. Cut spending and we’ll again see a future.

Stay the course of today and I’ll be damned if I – or anyone else with any sense – will do anything to help get unemployment lower. We all do enough to help people. Get the morons running this country to stop taxing and spending! THEN we can start to help by putting people to work. It’s not rocket science…

Posted by DOUG HULSE | Jun 9, 2011 8:00 AM ET

Regrettably, all too many of the ‘morons’ have little to no real world business experience and accompanying appreciation for how jobs are truly created. Might any other small business owners and operators care to weigh in on this topic?

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

 

  • Joe

    Maybe the White House heard what Doug Hulse had to say. Being reported this morning that the White House is floating a payroll tax cut. WaPo writes this morning,

    Inside the White House, there’s talk of cutting payroll taxes on the employer side. Outside of it, liberals are making noises about attaching further tax cuts or stimulus to a debt-ceiling deal. That makes sense, given that unemployment remains above 9 percent. What doesn’t make sense is that these are small ideas and, in the case of attaching stimulus to the debt ceiling, probably doomed ones. And though that’s bad for Democrats and bad for the jobless, it’s also a missed opportunity for Republicans.

  • Donald

    With due respect to Mr Hulse’s conventional view, I called it The Great Depression II in 2008.

    Washington is falling for cutting budgets, defending the dollar for the Bond Vigilantes, and in every way doing the opposite of what would help the economy.

    All this has been tried over and over and it never has worked. Thirty + years of lowering wages does not make a strong economy, endless bubbles not withstanding.

    Our 2-headed one party system has destroyed our country. The only sensible people are ignored or destroyed and the 4th Estate is totally corrupt as is our government. Only total collapse will bring possible change though the rise of some demagogue could make things worse as when we forced Germany to pay for WW I.

    Our ‘elites’ have no idea what they are leading us into because they are paid not to do so. All “sense on cents” solution swatted away–so the barge of state floats away untethered.

    Sorry to run on, but “Ive seen this play before it doesn’t have a happy ending.

    Thank you.






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