Not that this will come as any huge surprise, but the economy has been very difficult to predict over these past few months with a virtual muzzle on the normal means of hearing about things such as unemployment data, inflation rates, etc., but what I hear from our clients is that things are slower than last year and hiring is way down. We are running across more accounts laying off than hiring. It’s been more than a decade since I last heard that.
When we hear an abundance of clients saying, “I’m going to hold off for now” it is indicative of a market constricting, not growing. After 25 years in this business, I’ve seen these patterns before, but normally there’s a specific cause, like the housing crisis in 2008, disasters like 9-11, a dramatic spike in oil prices, stock markets plummeting, but this one has a different feel to it, and tariffs seem to be the most obvious factor. Whether it’s simply perception or reality, it’s making local manufacturers nervous, causing them to sit tight versus growing with confidence and aggressiveness.
I was talking to my favorite banker the other day, and he says he’s seeing his banking clients withholding expansion plans, staying put, not growing or investing in new growth. He couldn’t point to one client of his that’s ‘on the grow’. While this is far better than any sort of collapse or dramatic freefall, it’s clearly a very tight market with fear being more of a driver than confidence at the moment. As I’ve discussed many times before, fear is a very large factor in the economy, and the current situation we are in is no different.
Hiring is slow, and I worry that the employment numbers are spiraling downward at a fairly hefty pace. The last official US unemployment report was from August, and the current administration has hindered the BLS (Bureau of Labor Statistics) ability to release data the first week of each month as has always been their pattern, and the Government shutdown was blamed for not releasing October’s numbers. The next release date of this vital data is unclear at this time, but hopefully it will be sooner than later.
Now that the Government shutdown seems to be over, hopefully some normalcy will resume and perhaps businesses might regain some of the confidence that’s been lost over these past few months. A good sign will be when economic numbers are once again released in a predictable, timely fashion. I’m very hopeful that this still might occur in November, but not willing to bet on it.
As we all navigate these challenging times, it’s a good time to take stock of the good and potential for better in the coming months. If you are part of the 60% of Americans who participate in the stock market, perhaps you’ve seen some gains. The tide is low right now, but if past is prologue, it will rise again.
