It seems like everyone is fixated by recession talk.
Everywhere I look people want to know if we’re in a recession. Turn on the nightly news or the 24-hour cable news, and you’re treated to one dismal economic statistic after another.
I’ve been interviewed 3 times in the past week about recession and the outlook.
Are small businesses being hurt by recession? (“yes, some are being hurt, but not all – it’s situational”)
What should small businesses do during times like these? (“run the numbers before expanding, delay big expenditures, but otherwise business as usual”)
Will the tax stimulus package help? (“rebates will put a little extra cash in our pockets as consumers, but hardly be a blip for most businesses, except maybe retail which will get some benefit of consumers spending those rebates”)
Let me state it again: I am not worried about recession. Worry about macro-economic issues is a waste of precious mental attention.
Do I think we’re in a recession? I’m not a trained economist, so maybe I am not the best person to ask that. But, yes, I tend to agree with billionaire Warren Buffett when he said recently that by common sense standards we are in a recession.
However, that doesn’t mean you should have a negative outlook.
History is a wonderful thing, and it tells us one very important fact: recessions are temporary conditions. We’ve never had a recession that hasn’t been temporary. At some point the economy will start growing faster again. Meanwhile, consumers continue to spend and businesses continue to do business, even during recessions.
I would never suggest that you ignore negative economic news in pollyanish oblivion — that would be foolish. Just take it with copious grains of salt. Most of the news over-emphasizes the negative, because that’s the nature of reporting news, especially during an election year. Right now we are being bombarded with election season rhetoric. The candidates naturally want to display that things are bad so that they can talk about how much better things will get if they’re just elected. You’d do the same thing if you were running for President. We had this same heightened attention on the economy back in 2004 before those presidential elections. Once the election season was over, the economic talk was not nearly as negative.
Plus, glum numbers are rarely put into relative terms. If a statistic is relayed in a 90-second news blurb, I just don’t know HOW to feel about that statistic. Am I supposed to feel terrible because payrolls went down 17,000? Worried? Re-assured because it wasn’t worse? What should that 17,000 mean to me — anything? And when it is said that this number or that is at the lowest level in four years, I want to ask “but how low is it historically?”. I want to know — and rarely hear — how that number might compare with 2001 or 1992 or 1985 or 1932.
Rich Karlegaard writes in this week’s edition of Forbes magazine along the same lines, in Four Wrong Reasons for Pessimism. One of the points he brings up is that the glum economic mood is tied to a reflection of unhappiness with President George Bush. No matter which political party you belong to, you have to admit he is not a popular President right now. That colors the perception people have of how well the economy is doing. Seventy percent think the economy is off track, the same percent that are not happy with President Bush. Yet, as Karlegaard writes: “When asked about their own individual economic prospects, half of Americans say they feel positive about the future. About their lives, 84% say they are satisfied.”
And that’s the point. Your personal or your business circumstances are not the same as the Economy-with-a-capital-E. So much of running a business successfully is about your own mental attitude – whether you approach issues positively – and your daily decisions. The day to day factors have more impact on the success of many small businesses than do macro-economic issues.
For sure, if you’re in a housing or mortgage related industry, things have got to be tough in many parts of the country right now. And some businesses are being especially hard hit, such as if they rely on gas or heating fuel (landlords, businesses with fleets). I feel for you, if you are in one of those industries being hard hit right now.
But aside from selected industries, if you’re like me, your business is probably more affected by day to day issues, rather than macro-economic issues. I’m more focused on the possibility of one of our computers being on its last legs, or making sure that all data is backed up, or growing traffic to this website, or finding affordable help to run this business, or pricing issues. What’s more, these are decisions as a business owner I have more control over than macro-economic issues.
You can have a far greater impact on your business’s success by focusing on issues within your control, than by being a fatalist over a gloomy jobs number.