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Inside ICI


When And How Fast Will The Economy Recover?


Here Are Three Economic Metrics To Watch There’s no


T


he economy will recover from the pandemic.


doubt about that. But there is a lot of doubt about when. And how fast.


As cases continue to rise and


shutdowns proliferate, there’s not a single economist who can accurately answer these questions – no matter how hard they try or how smart they are. And unfortunately our steadfast economic indicators such as GDP and the unemployment rate are recording such unprecedented swings as to be unreliable, at least during these times. But you have a business to run.


There are people relying on your decisions. You need to know the answers to these questions. Because the answers will drive your investment, hiring and spending decisions. So what economic metrics can help? There is tracking those metrics that are based on actual, real-life data and not surveys and polls. There are three that I follow that you probably haven’t heard of. But they’re very relevant right now. The first is the Chemical Activity


Barometer. This is an index published monthly by the American Chemistry Council, an association not unlike the Investment Casting Institute except that it is made up of companies that sell, distribute and perform services within the chemical industry. We all know that everything we consume has a chemical component and chemicals are a key ingredient in just about all that’s manufactured in the U.S. So when the chemical industry is doing good, the U.S. is doing good. Since 1948, the American Chemistry Council has surveyed its members about their businesses – their backlog, sales, profits, hiring and other factors and puts that data together into their monthly index. The index of course fell earlier this year


4 ❘ January 2021 ® travel.


in the midst of the COVID outbreak but it has been steadily recovering. Keep watching. The next metric I like has to do with Every day the Transportation


Security Administration publishes the number of travelers that pass through the nation’s airports. The bad news is that travel levels are still about 40 percent of pre-pandemic levels. And there’s more bad news: it’s not rising very fast. Again, not a surprise. I know we’re doing a lot virtually, but humans need human contact. When people aren’t traveling it means that deals aren’t getting done, conferences aren’t held and families aren’t taking vacations. When I see these numbers begin to consistently improve that will make me feel confident that the pandemic’s effects are waning, people are getting tired of Zoom and both business and leisure travelers are spending money. Finally, I like to look at small


business confidence. Each month the National Federation of Independent Businesses publishes their Small Business Optimism Index. There are 30 million small businesses in this country who employ more than half of the people working and contribute almost half of the nation’s Gross Domestic Product. When they’re feeling optimistic, that’s a good sign. The NFIB of course doesn’t have 30 million members (wouldn’t you be jealous if they did?). But they have tens of thousands and each month – since the early 1980’s – they collect all sorts of economic data from them including backlog, revenues, margins, and most of all their outlook. They put this together into their closely watched index. So far…so good. As I write this, the confidence of America’s small businesses fell a few points after the elections but has been holding steady at


near historical highs, even in the midst of these difficult economic times. That bodes well for the future. If confidence among this very large and influential group erodes, my concerns will rise. These are just three of about a dozen metrics that I look at every day, week and month. They’re not governmental polls, like GDP and unemployment. They’re hard numbers based on actual business and consumer behavior. None of my metrics look particularly great right now. But they’ll improve. And when they do I’ll know that the economy is improving - and I can start becoming more offensive in my decision making. I look forward to that happening sooner rather than later!


Gene Marks is a columnist, author, and small business owner. He writes daily for The New York Times and weekly for Forbes, The Huffington Post, Inc Magazine, Entrepreneur.com, FOX Business, and Philadelphia Magazine. Gene has written 5 books on business


management, specifically geared towards small and medium sized companies. His most recent is The Manufacturer’s Book of Lists (Create Space, 2013). Nationally, Gene appears on MSNBC,


FOX News, FOX Business, Bloomberg, and CNBC discussing matters affecting the business community. Gene owns and operates the Marks


Group PC, a highly successful ten- person firm that provides technology and consulting services to small and medium sized businesses. Gene Marks will be giving a presentation


at the upcoming Business & Leadership Development Conference in New Orleans, Louisiana this April 18-21, 2021.


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