Tuesday, July 13, 2010

Is a puzzlement

I’m sitting on a hill in Little Compton, RI, above a tidal pond connected to the Atlantic Ocean, admiring what would be a great view except for heavy, black clouds that are being sundered by lightning flashes. It just figures that three weeks of hot and rain free weather were broken by a Canadian cold front moving through on a day that was planned for some R & R with classmates. Before you hand me that old saying about needing the rain, consider that it didn’t have to be today.

It’s all about expectations. Most every time I go down to the Maine coast I can count on foggy weather, save a glorious week in Boothbay Harbor when it only rained one day. So my expectation when planning a trip there is that inclement weather will occur.

A few weeks ago I had expectations about the country talking itself into a double-dip recession, and sure enough we seem to be doing it. I grant you that the economic news is not great, and were it not for the distractions of the World Cup, it likely would have been worse.

One of the songs in the movie Anna and the King of Siam is titled A Puzzlement. The King sings “Is a puzzlement” because he does not understand the changes that are happening. I have adopted this phrase when I am frustrated with certain events.

For example, U.S. unemployment figures were down last week, but the inevitable "but" was that they were not down by as much as anticipated. Housing starts were up last month, but not by as much as hoped. Steel production was down more than expected, but still was up from the preceding period. It’s when good news is not so good news, is a puzzlement.

And thus comes the second half of the "W" recession, or when a recovery is not large enough to be a recovery. Congress is back from another of its vacations so I expect that rhetoric will fill the news and talk shows about a slowing economy. The political right is using this to shoot at the president, while the political left will use it as raison d’être to spend more stimulus money. No matter how you cut it, we’ll all be the losers one way or another once the pols decide to use the double-dip as a political tool. Another puzzlement.

The laser business is having it mild ups and downs, with some sectors experiencing a mid-summer dip, but when haven’t they gone through this? I recall when I was in the capital equipment business we wrote off July as a month when we could not expect orders at the previous month's levels. So what’s changed? It wasn’t a recession then, just the summer doldrums. Now as it occurs in 2010, some say it’s the precursor to another recession. Is a puzzlement.

Expectations are that consumers will spend us out of recessions, and yet we chastise them for running up credit and going deeper into debt. I was on a rare shopping trip for summer wardrobe bargains on a weekday last week. The department store was pretty much empty, especially the men's department. I asked the sales clerk if he was concerned about the economy. No, he answered, a flier just came out advertising a big sale next week, and all the customers are holding off making purchases until then. I didn’t see that flier or I would have waited myself. . Luckily, the clerk kindly set my goods aside to be paid for this week at the sales prices. Consumer recession? Is a puzzlement.

As I wandered the store, waiting for my wife to find some bargains to lay-away for the sale, I perused the clothes racks looking at sewn-in labels. It’s a game I play when I kill time in the women’s department while she tries on possible purchases. My tops on international manufacturing locations has been 10 countries, but this day I could only make seven as China and Vietnam seemed to dominate certain brand names.

It occurred to me that the U. S. clothing manufacturers aren’t feeling the impact of the shoppers for these goods as they are all made offshore. Retail sales may be off, but that impacts the stores not the manufacturers. Simplistic? What else do you expect? I’m relaxing watching the storm move offshore and a brighter sky approaching from the West. It will be a better afternoon with the expectation for a lovely sunset; and that’s not a puzzlement.

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