Impact of an economic dip

BBB I would say we are in a depression now. But I've been told I don't get out much! Your posts are very informative.Tks

 

If we could get a governing body that can look forward and legislate out more than 6 months, business can again return to forward looking planning. Until then, companies will sit on cash. Uncertainty is a CEO's biggest challenge. They don't yet know what their tax rate is going to be, what healtcare costs are going to be, what new regs will come on line Jan. 1. What's going to happen in Europe, what a mess.

 

I know what your thinking, "WTF is he stalking me", no I'm not, I just like your threads. We may have different opinions on the economy & such but I still like your threads.

I think in today's environment people are working or predicting off old ways of business. Allot of manufacturers today do not inventory. A example would be a major company from IL called ITW-Illinois Tool Works. I worked for them running a business unit for a pretty long time. Their philosophy is they do not inventory. The reason is obvious, which is if it's not sold, it's not money, and inventory takes up space that manufacturing could take up. ITW works off of a 80/20 philosophy, which in short is 80% of revenue from 20% of the customer base, there is allot more to it, but that's the short version. So big companies like this won't inventory because they have the philosophy of MAKE IT SHIP IT. Now a days when people shop they have the internet, so stores don't really need to stock in order to sell any more either. As more and more people shop online line you will see more and more companies such as Best Buy go under. I think once the economy rebounds and people have money to buy you will see a uptick in spot market freight, but not at levels that are based on "historical views", because those trucks that would be used to restock, will not be restocking at levels they used to, because allot of big manufacturers don't stock finished or raw materials at levels they used to.

 

Recession.....what happens when the other guy is laid off...

Depression....what happens when you are laid off...

I have been a "part" of this depression since 2009. Saw it first coming in Summer 2008 and even into winter 2007/8. I was working manufacturing and you could see the down turn. We made components for computer hard drives.

40cal asked me how I saw things as being able for the small fleets to adjust to what's happening than mega's.

Easy, if you plan for the lean times, you just go fishing when they are too lean to run. I have a neighbor who runs a stepdeck. He's been running it for 30+ years. He came through this just fine.

Have another couple guys in town who have adamantly told me I am a flippin' idiot for wanting my own truck. Telling me how they lost the house, car, pick up, boat, motorcycle, ability to go west hunting, on and on....

When I asked them what they saved for retirement, Social security. How bout maintenance? I drove a brand new truck.

They spent if faster than it was coming in and living on credit.

The US people as a whole are gluttons and a "satisfy me now" society. We consume a lot of crap that is pointless. Energy drinks are just ONE of those things that come to mind. Look at what is marketed on TV and the internet.

I see there being another turn down and then a recovery. Fuel spiking has hurt the pricing on everything. The cost to transport all that product to market is simply passed on to the consumer. Unfortunately, the consumers income has not kept up with those costs.

SOMETHING will have to adjust. Either wages go up or costs will go down. But something is going to happen.

My bet is consumers will be taking a pause on purchasing, this will stall manufacturing and then a rebound in another 12-18 months from today. (june 2012) I don't think it will be a big hiccup, but enough of a hiccup to make things occur.

And no, I don't think politics will have much to do with it.

I still look at the number of new homes selling in my area. In 2005, our town had a record of like 160 new homes in a community of just under 6000. This year its less than 40 last I heard. And still a lot of foreclosures coming on the market weekly.

If people are still loosing homes, the jobs aren't paying and things are still not recovering.

 

To add, when companies need to add capacity they are starting to turn to companies such as Ryder, example Dominos Pizza, Toyota, & CVS. With CSA 2010, I hope it will soon be just as profitable to be a safe driver without a truck. Instead of bidding on lanes/loads with a truck, you may have the opportunity to bid an the same without even owning a truck. When companies need it now due to "make it ship it", they need carriers that can keep up with that. So as a major company would you go with say a CRST, when there is a chance that they may not be able to get that extra capacity moved via a load board, or go with a Ryder that can have a truck/trailer/driver available at the drop of a hat. Just my opinion.

 

With the exception of a few random, major, global events sprinkled in (wars, famine, and the like), here's how it's gone for the last 100 years: A depression or recession lasts a few years and is followed by around a decade of slow but steady growth, followed by a brief bubble of prosperity for a year or two, then that decade's bubble pops and the cycle repeats. The bubbles are tied to speculation. This decade's bubble was real estate, the last decade was dot com, and so on.

It's been stated often that prosperity and growth occur when consumers are spending. Those habits follow the cycle. Coming out of recession, people have been hurting and tighten their belts. After a few years they get more confident and spend more. After a while they think the gravy train has no end and they spend more than they have. When it reaches an unsustainable level, the bubble pops and everything starts over again.

Most of the topics discussed so far will have only a minor impact in the duration or magnitude of each part of that cycle, or affect specific sectors. Based on that, I predict steady growth that ramps up over the next 8 years or so. The next bubble will form near the end of this decade - 2020 give or take - and we'll do this again. How that hits you will be determined by what sector is inside the bubble and how your cash basis looks when it happens.

 

Not asking this to be political or start a argument between the left-right-extremists or what not. But does anyone factor in that the US debt into any of this? My concern lies on the election this fall & with the debt at close to 16 trillion(almost double in 4 years) we may see some dramatically different directions than the last 100 years of history has shown. If gov't spends more, cuts spending, raises interest rates dramatically/uncontrollably it is all going to be in a big way. This is uncharted territory in my eyes & will have an effect on corporate/personal spending & the goods that are shipped.

Those are the things that concern me, not stating it to be a pessimist, but probably not in the optimist boat either.

 

I WILL RESIST POLITICS...

I WILL RESIST POLITICS...

I WILL RESIST POLITICS...

I WILL RESIST POLITICS...

There - I DID IT...

Rick