Monday, July 06, 2009

Green Shoots or Dead Roots?

Over the holiday weekend I got together with a bunch of my friends who own businesses or are executives in companies. We had a chance to talk about what they see in their businesses and there was not a lot of optimism for economic growth in the USA. Many of the companies they represent have stabilized their businesses, but they are not expecting domestic growth this year. The consensus was that a lack of Capital Expenditures is forcing companies to spend more on maintenance instead of upgrades and replacements, but even operating budgets have been curtailed.

My informal research coincides with a report I saw by Reuters today. Some points in the report are below.

* The services sector represents about 80 percent of U.S. economic activity, including businesses such as banks, airlines, hotels and restaurants.

* Both manufacturing and service sector reports show signs that the 18-month-old U.S. recession, the most protracted in decades, may soon end.

* The Conference Board, a private research organization, said its Employment Trends Index slipped to 88.4 from a downwardly revised 89.1 in May. It was originally reported at 89.9.

* "Compared with the beginning of the year, the decline in the Employment Trends Index has significantly moderated," said Gad Levanon, senior economist at the Conference Board. "We therefore expect job growth to resume around the end of the year. "However," he added, "over the last month, leading indicators of employment were mostly disappointing, suggesting the Employment Trends Index is still seeking a bottom."


Green Shoots or Dead Roots - I think it depends on what sector of the Economy and what business you are in.

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