What Good Are the Leading Indicators?

“Wall Street predicted nine of the last FIVE recessions,” Paul Samuelson, Nobel Prize winner in economics, 1966.

We get a lot more economic news these days than when Dr. Samuelson said these famous words but it does not seem to make much difference in what the economy does. Gas prices plummet but the price at the pump can still change by ten percent in a weekend. The unemployment rate falls yet people still have to hunt for work. Interest rates remain incredibly low, the cable channels show lots of house renovations, and still house prices stay flat at recession levels. It is almost as if there are indicators pointing in every direction and no one can predict anything with confidence.

This uncertainty has a real impact on how we live our lives. I sometimes think we operate the world like a big Monopoly game except the rules are secret and do not apply the same to all players. How else can you explain going from “drill baby drill” $100 a barrel oil to sub $30 a barrel in a matter of months? No need to order all those pipeline supplies or to build a mill to roll big pipes at lower cost. New subdivisions in the Dakotas go on hold; retirements are delayed. How can a capital intensive business plan for these wild swings?

There was a time when we seemed to dream of big things like building an interstate highway system or putting a man on the moon. These programs drove our decision making and we treated recessions like speed bumps on the road to the future. Has American exceptionalism been replaced by Monday morning quarterbacking and finger pointing? Is fantasy football now more important than real football? My heroes are the companies that realize tough times won’t last forever, the outfits that find a way to persevere through these crazy economic mood swings and keep the team together for the challenges waiting on the other side.

About Charles D. Schultz 605 Articles
Charles D. Schultz is President of Beyta Gear Service and one of Gear Technology's technical editors.

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