My colleagues who contribute to the Wall Street Journal‘s poll worry more about recession now than they did last month.
Although financial problems are in the news, I suspect that many of us are more worried about Main Street. Reports that consumers are spending less, such as the Journal’s article about plastic surgery, cause me to worry more. Cosmetic surgery is not a lynchpin of the economy, but it may be a good indicator. It’s a big-ticket, discretionary expenditure, often bought on credit, without collateral. Kind of like a car, except that the repo man can’t come after your implants.
But when we get past the anecdotes, I don’t see the recession. For example, the recent Manpower survey shows the difference between employers who expect to expand and those who expect to contract their work force is 17 percent (seasonally adjusted). That’s down a touch from last quarter, but not below the long-run average for the series.
Business Planning Implication: Certainly do your contingency planning, but don’t get too cautious. Most likely the economy will expand in 2008.