Friday, May 31, 2024

It's Not Just Them Anymore

How bad is the American economy?

Well, you and I know that you can't trust the government statistics. But anecdotal evidence, like grocery bills, mortgage rates and gas prices tell the story, if more quietly. And here's another little indicator:

One of the first things you see when times get really bad for white collar types is the rise of networking groups. All of a sudden, people who use to guard their businesses the way Russia guards its nuclear codes decide to not be selfish. They open up over early morning bagels and coffee, sharing information, leads and strategies to a big, friendly -- and increasingly poor -- group.

I'll be candid here: I've never been to a networking group where people are handing out real business leads like free samples at Costco. No, if you attend a networking meeting, you're basically paying to meet other people whose businesses have dried up even faster than your own. You just watch your e-mail in box. See how long it takes for the invitations to come flying in.

There are other indicators, too, if you know where to look. My buddy Mark always knows when the economy is going to sink because he's in the warehouse/racking business. Prices go up when times are good and companies need to store their inventory. But when things go south, companies decide not to produce any inventory because they can't sell that inventory and they certainly don't need to carry the costs of storing that inventory. It's been months now, and the warehouses are emptying out faster than coffee urns at Starbucks. Everything is gone, including the racking on which inventory was stored, leaving huge, hulking vacuums in warehouses that would best be converted to indoor tennis courts.

When I was a young buck, I worked in an ad agency in Century City. The office was in one of those big towers, with floor-to-ceiling windows that sported views of the entire city. At the time, the economy was seriously in the tank. I'll never forget the day when Darrell, the agency owner, himself a westside millionaire, wandered into my office while staring aimlessly out the window at the vast urban expanse below and sighing, "It's not affecting just them anymore."

Eventually, things changed and things improved -- but not without a lot of pain.

This time, the pain is not only real, it's pervasive. And everyone from Main Street to Wall Street is ready for a very big, very historic shock to the economy, if not the American way of life.

It's headed straight for you, too. You know why? Because it's not just them anymore.