3Q GDP forecasts revised upward

The WSJ’s Real Time Econ Blog has collected a group of economic forecasts that have been revised upward, due to “signs that businesses were paring down inventories.”

A more thorough article on the topic cites the “cash-for-clunkers” program as one predictor of improved consumer spending, making it necessary for car companies to make more new cars than previously planned.

Still, in the largest wave of upward revisions of GDP forecasts since the financial crisis began, UBS AG is now predicting 2.5% growth in the third quarter, up from 2%, and 3% growth in the fourth quarter, up from 2.5%. Wells Fargo & Co. also revised its third-quarter forecast to 3% growth, up from 2.2%. For the fourth quarter, it is now predicting 2.0%, up from 1.6%. T. Rowe Price Group Inc. increased its third-quarter projection to 2.75% from 1.3%.

But as everyone seems to be saying, “The data indicated that consumers concluded the first half under intense pressure from a weak labor market. That suggests the anticipated GDP growth won’t be enough to substantially bring down the unemployment rate.”

But there was more:

Economists already had expected growth to rebound in coming months after companies drew down inventories in the first half of the year. A promising manufacturing report this week showed a jump in new orders and production, building on those expectations. “When you combine leaner inventories with more sales, that’s the fundamental reason for being more optimistic about at least the second half of this year,” said Mark Zandi, chief economist for Moody’s Economy.com.

The article suggested that once the “cash-for-clunkers” program was over (either because it’s not renewed by the Senate, or when it burns through a potential second round of cash), there would be “payback,” presumably in a corresponding dip in car sales.

The best-case scenario for sustained growth is a strong second half, with improved consumer spending and confidence, and without the massive layoffs that have marked much of the recession. Short of that, business investment would have to make a comeback for expansion to continue. New orders are showing encouraging signs, but so far there’s little sign the growth is widespread. Although housing isn’t expected to lead the recovery, signs of improvement in the sector could buoy growth in the economy. The pending home-sales index, which measures housing contract activity and is designed to foreshadow existing home sales, increased 3.6% in June to 94.6 — its highest point since June 2007.

My belief is, now that the worst is behind us, the country will be better able to get back to business as usual. Maybe a bit more wisely.

Customer Service Technologies to Watch

As a person in the midst of the job search as well as seeking project work or contract business, I’m interested in finding signs of life in the economy. One area where companies ARE investing right now are Customer Service Technologies.

The Wall Street Journal this morning reports:

Companies are trying harder to please customers amid the recession — and it appears to be working. The American Customer Satisfaction Index, a widely followed survey conducted by the University of Michigan, is at a record high. Other surveys also report gains in customer satisfaction. The results are unexpected, because customer satisfaction typically declines in a recession as companies cut costs, says Bruce Temkin, a vice president for Forrester Research Inc. In this downturn, though, he and other analysts say companies are protecting spending that affects customers.

Here are a couple of examples:

  • Sprint Nextel Corp began a service-improvement plan at the end of 2007. Call-center operators now are rewarded for solving problems on a customer’s first call.
  • Cheesecake Factory Inc last year added an online customer survey to its “mystery shopper” program to assess service in its 146 restaurants. “Chief Executive David Overton cited the service initiative Thursday when Cheesecake Factory reported second-quarter earnings that topped expectations, though net income fell.”
  • Comcast last year introduced software to identify network glitches before they affect service and to better inform call-center operators about customer problems. The tools, and more employee training, helped Comcast cut repeat service calls 30% last year.
  • US Airways Group Inc. last year deployed hand-held scanners to better track baggage, part of an effort to improve reliability, convenience and appearance.
  • Southwest Airlines Co. recently introduced a system that allows customers waiting for a call-center operator to hang up and receive a call back, without losing their place in the queue.

Forrester Research suggests that 57% of large North American companies employed an executive in charge of customer satisfaction in 2008, up from 27% in 2006.

Tom Peters is writing a new book

I note this because Tom Peters is one of my favorite “business guru” authors. As the previous posting relates (just down below), I think Peters is almost always right on the mark with his predictions of the way business is going to go. And I note this too, because it was his book The Tom Peters Seminar in 1995 and 1996 that provided both the inspiration and the blueprint for my own excursion into the freelance world (“Bugay Communications”). And I note this because, right now, as I face the job search, and as I am making the effort to think through what I can do and want to do for the next 10 years or more, his “Reinventing Work” trilogy” (The Brand You 50, the Project 50, and the Professional Service Firm 50) are at the top of my pile of books, again, providing inspiration and a blueprint.

(You may ask, “isn’t it a bit self-defeating to use a business book that’s 10 years old as your “inspiration and blueprint”? But in my opinion, his more recent work, “Re-Imagine,” is not much more than a repackaging and an expansion of the themes in the “50” books.)

At any rate, his new book is entitled The Little Big Things: 179 Ways to Be Excellent and is due out in about January 2010.

It seems to me that as he gets older, he keeps re-circling the same themes — this time it’s “Excellence” — and that in using the number 179, that possibly the packaging, or re-packaging, of the excellence theme, will take on the form of a “to-do” list, similar to that found in the “50” books. So this new work will be re-set in the context of today’s current economic woes. But the “how to” and the “what to do” portions of this work will again, largely, be similar in nature to what I’m reading now.

90% of Jobs Disappearing?

Almost 10 years ago, Tom Peters predicted that “ninety percent of White-Collar Jobs — as we know them today — will disappear or be changed beyond recognition in the next 10+ years.” I think the reasons he gave were sound. But at any rate, it’s a huge restructuring in the workplace. Could this restructuring be what’s happening right now?

Think about this in terms of the way technology and machinery affected “blue collar jobs”. It’s a continuation of how technology caused the destruction of “farming jobs” if it’s fair to think about it in these terms. With machines causing huge increases in productivity in the factories (and on the farms), it freed up huge numbers of people to take on other issues.

In historical terms, this phenomenon has been called “unemployment” — well, maybe not in the case of the “lost farm jobs”. But there was a time when advances in technology enabled huge numbers of people to give up farming and move to the cities to work in factories. Later technology enabled the factories to do more with less manufacturing labor.

The Wall Street Journal’s lead story today notes that “in recent days, [policy leaders] have all talked publicly about the unusual disconnect between growth and employment.”

“Growth” has resumed. The uptick in employment that normally accompanies “growth” has not. So one of two things could be happening. First, the uptick will occur, but it just has not occurred. Or second, it could be that no corresponding uptick is going to happen.

What’s the right way to deal with this? In eiter case, I think that the solution is going to have to be an entrepreneurial one. I’ll have more to say about this in future posts.

Is the recession over?

I’ve been reading a lot of snippets that suggest that the answer to that question may be “yes”.

The OECD, which measures “leading indicators,” suggests improvement is on the way:

Some of the world’s leading economies showed tangible improvement in May … They suggested many major economies — including the U.S., the euro zone and China — could end their declines later this year. Overall, the OECD lead indicator rose by 0.8 point to 94, the sharpest rise this year, but it was still down 7.3 points from May 2008. The indicators are designed to indicate turning points in economic activity about six months in advance, and the calcuations are based on a wide variety of data.

This article suggests that “an increase in exports bodes well for growth”:

Tentative signs of life in global trade are emerging, buoying growth forecasts in the U.S. and China, two of the world’s most important economies. U.S. exports grew in May, while imports fell, helping to narrow the trade deficit to its lowest level in nearly nine years. The report prompted economists to revise up their estimates of second-quarter gross domestic product. Some even suggested the economy might have grown slightly in the second quarter. “It’s a very good sign for GDP,” says Paul Ashworth, senior U.S. economist for Capital Economics in Toronto. “The economy didn’t shrink by much in the second quarter, and there’s an outside chance it recorded a gain.” Forecasting firm Macroeconomic Advisers increased its second-quarter GDP forecast from minus 1.6% to plus 0.2% on the news. New figures from China offered more support for the prospect that the massive drop in global trade is abating. Exports in June fell 21.4% from a year earlier, a smaller drop than May’s 26% decline, China’s state-run Xinhua News Agency reported Friday, citing official data.

That’s not huge, but it’s more in the right direction.

Still, I think everyone acknowledges that there are drags on the economy. The WSJ’s David Wessel suggests the recovery will be a painful (i.e., “jobless” one):

All signs point to a recovery so painful that many Americans may not realize when it finally arrives. There are signs the recession may end in coming months, but the U.S. economy’s recovery is likely to be so painfully slow that many won’t feel the difference. First, the good news. Auto sales and housing starts have fallen so low that they are unlikely to fall further, hence the talk of “stabilization” in those big, beleaguered industries. The mountain of unsold goods in factories, warehouses and stores, though still large, is shrinking. That eventually will lead manufacturers to stop reducing production and laying off workers. U.S. exports perked up in May. Credit markets are beginning to heal. Big companies are selling bonds. Even banks are selling new shares of stock. “Right now, we’re like a patient whose condition has stabilized and whose fever is just starting to come down,” Janet Yellen, president of the Federal Reserve Bank of San Francisco, said recently.

But the job market remains awful. In December 2008, forecasters surveyed by The Wall Street Journal predicted the jobless rate would hit what then seemed a very high 8.1% at the end of 2009. Surveyed again this past week, forecasters now anticipate year-end unemployment of 10%. That suggests 775,000 more Americans will join the ranks of the jobless in the next six months.

On balance, though, I think that the signs are very hopeful that my own job search is going to be a good one.

The downside of “magicJack”

On my Facebook site, I’ve written fairly extensively about the technology troubles I’ve been having, mostly with the eMac. It’s still dead. I use this machine for desktop publishing, and so I need to get a replacement soon. Fortunately, thanks to a program called “DiskWarrior,” the files are saved and able to be retrieved. I think. That’s what they say, anyway. My hope is to get this done soon, although, I’ve had a $500 repair bill on the van, in addition to my other expenditures.

Which included the need to replace my cable modem and router. I had an all-in-one Linksys unit; this was down late in the week last week. It was another $130 to replace it (this time with two units).

In exchange for these expenses, enabled by technology, there are compensations, provided by technology. I bought one of those magicJack units to enable me to scale back the cellular service, and also to avoid the monthly phone bills. But the unique downside comes when you need to call the cable company to report that your cable is out. You need to use the cell phone, and waste precious and sometimes costly minutes.

This is not, I suppose, the fault of the magicJack people. The unit is doing what it’s supposed to do.

Took a few days off

Part of the “inner gyroscope” thing. I know, the search for work should be full-time work, and I’m up for that. Monday I mailed the first 30 from my Dun & Bradstreet list (www.zapdata.com) of Pittsburgh area software firms. No bites on that yet — one returned — but I’ve also created a series of documents so that I can phone and otherwise follow-up with each individual that I write to. The process of direct mail and follow-up is one I intend to farm over the next several weeks, as a way of building up a current network of contacts, perhaps gaining such project work as is available out there, and even leading to a full-time position.