Domestic Tranquility

In many parts of our great country, domestic tranquility is hard to come by. I'm not speaking of conversations between the adults in the house, but the uneasiness many feel concerning the economy.

It appears that we could be facing a form of perfect storm. The price of gasoline has risen dramatically in the last two years, settling in at just under $4 a gallon. Housing inventory exceeds demand, interesting lending practices over the last few years have dried up liquidity for borrowers, and the adjustable rates used so frequently just two or three years ago are adjusting. In addition, the affected industries, construction and autos, and their supporting industries, continue to shed jobs.

Those so-called homeowners with adjustable rates have been putting discretionary dollars in the gas tank, hitting two sectors fairly hard - department stores and non-profits. Consumers are flocking to Wal-Mart and Costco instead of Penneys and Sears. Some of the adjustable rates have begun adjusting, with the majority of them set to adjust beginning in January of 09. We expect the foreclosures to continue to rise.

Given all this, we don't expect 2009 to be much prettier than 2008, and the economic conditions could worsen before they improve. Is there any good news in this?

Well, some of the larger companies on the planet are setting up shop in America. In spite of our current challenges, America is still the world's largest consumer economy, with the best trained workers, and the best legal and physical infrastructure of any country in the world. Every day, it seems, we are reading of a new company that has selected a town or city in America as the place for its next manufacturing facility. I expect this trend to continue, and not just because of the relative weakness of the dollar.

For those who depend on jobs for their livelihood, which is most of America, this would be an ideal time to learn people, leadership, and management skills, so they are prepared for promotions. For those who depend on technical skills, retraining is the word for the day.

For those who have other forms of income, such as business ownership, cash, as always, is precious, and is king. Those who have depended on debt to support their lifestyle are already in trouble.

What are the opportunities? For those with cash, the challenge will be separating the good opportunities from the great opportunities. Also, many of us will have the opportunity to give of our time, money, and energy to those who have been hit hard by this perfect storm.

Until next time...

Randy