Economic Observation

As I was driving to work today, I had the radio on.  It was tuned to a clear channel AM station.  The program was a syndicated program.  I have listened to this station most of my life.  I remember when they picked up this program.  It is one of the highest rated syndicated programs today.  And I want to use this to illustrate how observation can tell you more than some of the conflicting or hard to understand numbers that come from the government.

As with syndicated shows, they have breaks. During the breaks certain things happen, but in every break there are commercials.  It is how the station pays its bills, as well as the show.  I don't know which commercials are the stations, and which are the sindicators.  But the break I heard started with a satirical bit done by the show, followed by a public service ad.  We all hear public service ads, but keep in mind that if there is a paying customer, the public service ads are moved back, often to late nights or early mornings.

To have a national show that goes into break, at this time of day with two non paying slots is unusual.  And that is the point of today's blog.  When you notice unusual things you can make certain deductions based on what is happening.  In this case they did not sell out the ads on this program.  That means advertising dollars are dwindling.

Most companies that deal with the public advertise in some way.  When sales go down a little, these companies will often spend a bit more in advertising to try to get more people to buy their product.  The only time that doesn't happen is when sales are depressed for a while, and there simply isn't any money to budget to, in this case, radio advertising.

Be careful, though, one instance doesn't mean a bad thing.  Other factors can come in to play.  Perhaps the station or sindicator had turnover in their sales force, or even technical difficulties.  The point is to look at trends.  As I thought back a bit I remember seeing more public service ads and program teases on TV as well.  We also see print media in trouble.  Mergers, bankruptcies and moving to electronic publishing are showing that ad revenues are down.

I am seeing a weakness in our economy, simply based on the decreasing ad revenues.  The other day I read a story about how tax increases are affecting sales early in this current quarter.  In that story it talked about a couple who are giving up their date night, to pay taxes.  But we all know taxes only went up on the rich...  To quote Bill Engvall:  "Here's your sign."  You are the rich they were talking about, and they were patting themselves on the back (both sides) for stealing your date night.  But it's patriotic to give up something for your country, right?  Hmm I wonder what Washington gave up...

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Increasing taxes in a slow to recessionary economy is disaster.  As you drive to work or school, or anywhere else notice how many openings there are in store fronts.  How good has traffic been lately?  If you go out to lunch, how busy is the restaurant?  All of these things can be observed and give you an indication of the strength of the economy, at least in your geographic area.  Right now, our area is bad.

So what can we do?  One of my tenants is that the economy is group psychology, so we need to try to stay upbeat.  If you are employed have that sense of security.  Do what you need to do to secure your future, understand that we go through times like this, it is called the business cycle.  In my lifetime there have been 2 or 3 serious downturns similar to what we are experiencing now.  In the late 70s things were even a little worse because we had inflation to boot.  But it is my opinion that inflation is just around the corner, if not already here.  It is being caused by several things, but the largest controllable reason is the Federal Reserve, a quasi governmental agency.  Bottom line, try not to pull back from the economy, the United States is still the best economy in the world, and we will survive this time because of our people.

Other things you can do is observe what you are buying.  We are in a global economy, it is OK to have a nationalist sentiment and buy as close to home as possible.  Walmart, Kmart, and the rest may not like what I am about to say, but they are not as close as your local merchants, they will not offer the service a local merchant can, and they live on imported products.  Turn the box over, read the country of origin.  If a product is not made here, and there are some, at least try to buy from a local distributor, or American based company.

Let me give you an example from my industry, mattresses.  The Chinese make mattresses, they make them so cheaply that they can ship them here and still allow merchants to sell a Queen bed for just a couple hundred dollars.  Their quality is poor, and they even ship them compressed to save freight.  The brand we sell is sewn in South Carolina, granted there are some imported parts.  Some of the parts imported are because of government regulation making it too expensive to produce here, others are just way cheaper than the American alternative, so it is a balancing act, but at least the bulk of the production labor are from our South Carolina neighbors.  And yes our mattresses are more expensive, but they will last 3 to 5 times as long as the imports, but are not even twice as expensive.

My grandparents knew value.  They bought products that will last.  Grandma would do things like buy pillow protectors to make her pillows last longer.  When was the last time you bought a pillow protector?  And why?  Because the pillows are in relative terms cheap, especially from the big box stores, it is easier to throw them away.  Today we talk about the environment and landfills alot, why do we buy products that will go there too soon?  They never had a lot of money, and they even survived the Great Depression, perhaps we need to follow their example...

Spend Wisely!