A few notes on the economic outlook as reported by the Senior VP of the Federal Reserve

As I have reported to you over the last several months about the continued price increases over all product lines….the “inflation” issue is simply one of the many signs of our economic problems….and there are many, many more.  At the risk of sounding a little negative …..not intentional as we at Suncoast are coming off an outstanding first quarter of 2011….I wanted to share a few notes provided to me by a good friend Joe who attended an Economic Report” meeting hosted by David Altig, Senior VP of the Federal Reserve in Atlanta……… Brace yourselves….he really didn’t have any “good things” to say about our situation…

Called it the WORST economic situation since the Great Depression…. we are “two years” into a sputtering recovery and he is still very “Nervous” about it! While the consumer market consensus is good…it is not reflective of the overall economy….  2009 we saw a 6% growth due to inventory rebuilding  and first time home buyers  credit program….( not sound sustainable growth )     2010 saw a 3% growth in consumer / private sector spending in core growth areas…however… the 4 th quarter was DOWN 2% as compared to the first quarter of 2011 being up 4% and looking the same for the 2 nd quarter of 2011.  His forecast… 2011 tracking forecast show CONTINUED DECLINE but there is good news…forcasts are just that…and are usually WRONG…could be better…but probably worse !  For 2011 they see a continued consumer spending slowdown due to continued price increases on energy, gas and food…and they anticipate the increases to be substantial!  We have a “perfect storm brewing” with the Middle east turmoil, the Japanese Nuclear plant meltdown, earthquakes, droughts and floods.  despite all this news…return of the recession is not showing and our continued improvement in energy efficiency has reduced the oil crisis impact.  Interesting fact is that we are still importing oil at the same volume levels of the 1970’s !   Spending is down and savings are up…( those two factors are always opposite of each other )

There cannot be much improvement until the housing market improves…and there cannot be sustained growth without the improvement.  2011 will hit new hosing lows in sales and value.  Expect continued price erosion of 5% to 7% over the year.

The labor market in 2010 had 200,000 plus jobs added .  Unemployment rate dropped 1% in March to the 9% range….Not enough of the unemployed are “looking for jobs” and that skews the numbers… Previous long-term unemployment benefits were 18 weeks…that is now 39 weeks and more in some states…and that is proving to be a disincentive for folks to find work.

Growth rates for existing and new business starts have stalled FOR THE FIRST TIME IN OUR HISTORY !  We cannot grow the economy unless this changes !

Manufacturing is not dying as reported…it was up 12% GDP.   Manufacturing is where our productivity is….. Globally production is up primarily due to China and Brazil.  Modest growth for US does not mean global modest growth.

The “takeaway” Joe received from this report was that to continue to succeed he would need to be creative….look at the situation as the glass half FULL…and half full of opportunity ! But we must take action…we have clients that are struggling and we need to HELP THEM succeed …and in turn we will prosper.   Keep working…Keep moving ….KEEP SELLING !   Standing still is the beginning of decline…..   EUBY

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