River Cities Business Journal: Cover Story

River Cities Business Journal

I am disappointed in my colleagues in the national media.

Once again I hear and read them making statements that will become self-fulfilling prophecies.

The latest is the scurry to get someone, anyone who may be trusted, to say we are in a recession.

A recession has a definition. According to Wikipedia a recession is “a decline in a country's real gross domestic product, or negative real economic growth, for two or more successive quarters of a year.”

The growth in the GDP in the final quarter of 2007 was less than spectacular, but it wasn't a decline.

And it takes two quarters in a row of a decline to qualify as a recession.

The next report is due out the day after this publication goes to press (April 30), but you can bet your boots there will be journalists hunting for economic experts to say we are in a recession.

Something that, given the information available to me today, can not be possible to tell until the end of July.

And then only if there was a decline in growth in the yet-to-be-announced first quarter of 2008.

I believe, as do many of the business people I talk to, that much of today's economic slump was brought on by the national media. Pundits across the board, looking for headlines, predicted a housing slump and advised potential buyers to hold off on their investments.

So they did just that and the housing market slumped.

Who knows how many people decided not to buy, or even shop, for a new home because of the predicted slump.

I'm sure a few fellows in major urban areas got big pats on the back and maybe even some raises for predicting the slump and being one of the first to report it.

A drop in the market was easy to predict. Production outpaced demand for a couple years. Supply and demand would guide the market. Of course it would be called a slump when buyers had more leverage.

But, would it have become a market in which buyers feared to even shop without the influence of major media?

I doubt it.

And the slump isn't all that bad.

In 2006 there were 1.5 million homes sold nationwide. In 2007 it was only a million.

That's still a million homes sold a year.

Now the theme is recession and it is my guess the numbers won't support it.

The dollar has fallen quickly and quite a bit. It won't buy what it once did, but that also means foreign countries can buy U.S.-made goods more cheaply.

The demand for blue jeans, Ipods and American entertainment has always been there, but now it becomes more affordable to other countries.

So while our media obsesses on the idea of recession it is also overlooking a narrowing trade deficit.

A cheaper dollar and a narrower trade deficit just mean more people buy American goods and more tourists are able to visit the U.S.

I think I'd call the current state of the economy a market adjustment.

As for business locally, I think it is time to face things as a challenge. Look for ways to save money, but also look for ways to increase income.

I've got to applaud the guy I saw selling hot dogs for $2 apiece on Highway 95 during the River Run. He had people waiting in line and you could buy hot dogs at Circle K for $.99.

He saw an opportunity and took advantage of it.

That is what more people need to do and they need to do it soon.