The Economy as we pull into September and Prime Time Business

I don’t know about your business but I know for a fact my company and most of the ones I do work for find summer months very hard to grow. People on vacations, kids home, minds other places than work.

The economy pulled out of a dangerous ground in July/August as we plodded along with the doomsayers telling us of the demise of the business world as we know it. This spring and summer, thanks to strong exports, has allowed our economy to grow, but of course the “experts” do not expect this rebound to last. The economic slowdowns overseas could make exports harder, but I feel it is more a stronger dollar making our goods and services more expensive. Yet out 4.7% increase in productivity is and will make us continue to be cost effective and very aggressive in the market place. The experts say that Americans are getting worried that with the end of our rebate checks we will have no money to spend. Yet they missed seeing the increase in durable good orders that came in July until their little reports told them it happened. What a way to live,1 to 2 months behind life’s events. Yes we still do need to be aggressive and vigilant in the 2nd half of the year but all is not lost. Ours is not a hopeless cause. To the victors go the spoils!

Lynn Reaser, chief economist at Bank of America's Investment Strategies Group stated "There will be heavy sledding for the U.S. economy during the next couple of quarters,"

Ok so maybe we need to work a little bit harder, a little bit more aggressive, a little bit smarter.

Gross domestic product, grew at a 3.3 percent annual rate in the April-June quarter, the fastest pace in nearly a year as reported by the Commerce Department on Thursday. The revised reading was much better than the government's initial estimate of a 1.9 percent pace and exceeded economists' expectations for a 2.7 percent growth rate. Much better? Ha vastly better.

The rebound followed two rough quarters. The economy actually shrank in the final three months of 2007 and barely budged in the first quarter at a 0.9 percent pace. The 3.3 percent growth in the spring was the best performance since the third quarter of last year, when the economy was chugging along at a brisk 4.8 percent pace. Sitting in my ivory tower scratching my head, looking at my books and numbers thinking, mmmm 33 years in business and my company grew at over 15% in the first half of the year. Am I on a different planet or in a different country here? I make my world and my business environment.

White House press secretary Dana Perino said the numbers demonstrated the economy's resilience in the face of many challenges. But she added: "No one is doing a victory dance." Yet Dana Perino did not call me up and ask the secret to my growth. I yes I did take my wife out dancing.

Martin Regalia, chief economist for the U.S. Chamber of Commerce said it's "the last hurrah for this economic cycle," When I read that I know there was a reason I was not a member to the U.S. Chamber of Commerce. Positive attracts positive. Growth attracts growth. I remember in the movie “It’s a Wonderful Life” when after a bank run Jimmy Stewart put the last remaining dollar they had left into the vault telling it to grow and give birth. The law of attraction. Its real, it works. Money attracts money.

Federal Reserve Chairman Ben Bernanke has warned the economy will be weak through the rest of 2008. Well I am here to say; “NOT MY ECCONOMY nor my client’s economies”. Not going to happen here. I am, we are in a growth mode here and we will not let that happen in our micro economy.

The economy is the top concern for Americans. Democratic presidential contender Barack Obama favors a second government stimulus package, while Republican rival John McCain supports free trade and other business measures to buttress the economy.

Maybe we should be looking at a more laissez faire government when it comes to business. Lower taxes, change immigration laws to let restaurants, nurseries, landscapers, fast food, farmers access to workers who which to come to the USA and work those jobs, and let business save the economy. I have yet to see the government produce any goods or services (other than social services). The government is a leach to society dragging down hard working people (yes Ill debate this fact with anyone).

For months, housing, credit and financial troubles have hammered the economy. Not saying this is not a problem but again it does not have to be your micro economy. Let it be your competitor’s problem.
Employers have clamped down on hiring, driving the nation's unemployment rate up to 5.7 percent in July, and a four-year high. The Labor Department said Thursday the number of people signing up for jobless benefits declined last week for the third straight period, but remained above 400,000 (key note here is that with the new law extending unemployment benefits they found many people who applied for benefits actually worked and were entitled to new benefits rather than extended benefits) -- an indicator of a slowing economy.

Employers have cut jobs every month this year and wage growth is trailing inflation. Yet Larson & Associates has had to employee more Associates to keep the wheels of progress moving. Granted we only grew at 50% of what we wanted and projected but times are tough. Granted we also acquired 4 deadbeat EX-clients who can’t or won’t pay their bills.

The biggest factor in the GDP's second-quarter rebound was robust sales of U.S. exports. The weaker U.S. dollar has bolstered those sales, which accounted for half of the gain in GDP. Exports grew at a 13.2 percent pace in the spring, more than double the 5.1 percent growth rate logged in the first quarter.

Imports, meanwhile, fell at a 7.6 percent annualized pace in the spring. The improved trade picture added 3.1 percentage points to second-quarter GDP, the most since 1980. Stronger dollar made imports more costly. Ok life happens, but why does it have to be your life and business?

U.S. consumers did boost spending at a 1.7 percent pace in the second quarter, the best in nearly a year. Government stimulus checks of up to $600 a person helped, and many expect consumers to pull back in the months ahead as unemployment rises, paychecks shrink and their biggest asset, their homes continue to sink in value. Home and land values are a big problem here, but many of the lenders did it to themselves with risky mortgages, bad appraisals so they could get their loans through and 100% financing.

The effects of the housing market's collapse were evident in the GDP report showing that builders cut back at an annual rate of 15.7 percent in the second. If you’re a builder I ask you, what did you do about it? Sit back and let it happen to you or get aggressive and look at alternative ways to do things?

Businesses have trimmed spending on equipment and software this last spring. They reduced investment in inventories, but not as much as initially estimated by the government, which contributed to the improved GDP reading.

Corporate profits showed companies losing ground in the second quarter. After-tax profits fell 3.8 percent in the spring, compared with a 1.1 percent increase in the first quarter.

With the economy still coping with fallout from housing and credit problems, the Fed is expected to hold interest rates steady at its next meeting on Sept. 16, and probably through the rest of this year. Is this a good or bad thing? Seems like that tells me level inflation rate or drop as oil prices will continue to drop as short term buyers and speculators pull out of the market.

Larson note: What happens in the nation or the world does affect you and your business but it does not have to taint your company’s growth, you, not your competitor, control your destiny. You want to shrink your company? Go ahead. You want to grow your company. That too is YOUR choice. You want help growing? Call us, that is what we do best.

Howard Larson
Larson & Associates
Target Marketing & Telesales Professionals for new account acquisition
Making good businesses great and great businesses even better

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