Signs of the Real Economic Recovery
Having observed the direct marketing industry for 30 years, I find one aspect of economic downturns and recoveries is always true: The recovery takes longer than the downturn. The drop is always faster and more visible than the recovery. Business can plummet in one day, as it did on Sept. 12, 2001, and then take years to climb back. The 1929 stock market crash on Black Friday took only a day or two to trigger the Great Depression; and the years of recovery following were long and arduous for America and, indeed, the world.
The beginning of a downturn usually is marked by a jarring event. In the hours and days after these tectonic occurrences, it is essential that we put in place immediate shifts in strategy and finance to conserve and protect our business valuation. But the improving turn in the economy is never marked with billboards that read, “OK, it’s safe for full speed ahead.”
As we make the turn at the bottom of the present economic setback, it is important to anticipate and recognize certain, cardinal signs of recovery—signs that allow us to have a percentage chance of being right for a timely expansion of our businesses and our investments in new customer acquisition and growth.
External Signs of Recovery
You can second-guess the economy all you want, but common sense tells us that a few elements have to be in place before things begin to improve. There are several external, macroeconomic effects to look at as heralds of a recovery:
Mile Marker No. 1: Leading Economic Indicators. The leading index consists of 10 indicators that contribute to the future state of the national economy. Each of the indicators can advance, decline or remain the same. In September 2003, four of the 10 indicators advanced, pointing to a positive outlook for continued pickup in the economy. The advancing indicators were average weekly manufacturing hours, stock prices, manufacturers’ new orders for consumer goods and materials, and manufacturers’ new orders for non-defense capital goods. The declining indicators were real money supply, interest rate spread, vendor performance, index of consumer expectations and building permits.