Just how bad the economy can get over the coming months is the question of the day. The precipitous drop in the domestic economy has continued unabated and despite political attempts to promote a better situation the true dire nature of the situation is now being realized.
Across almost every sector of the economy including the promotional products industry there has been a slow but steady pullback. The depth and speed of the decrease in domestic output is startling. Unlike previous recessions this one will cut across all sectors of the economy and indeed is being driven by many factors. The news today continues to create panic with job losses increasing at a rate not seen since the period after the 2001 terrorist attacks. At the same time foreclosures and overall credit delinquencies are skyrocketing. Worse there are fears of many bank failures - potentially as many as 200 over the coming year.
The question now becomes how bad is it truly going to get for the average small business? The stalemate in the credit markets is already leading to much tighter credit standards within many industries. This leaves small business owners trying to finance operations from banks which likewise are currently very stingy in lending at this point. Ultimately that leaves many businesses stranded in the credit markets and prevents them from being able to grow and add new jobs. Compounding the problem and eroding another source of funds - profits - is the increasing fuel and oil prices. Profits are going to take a beating in 2008 for many small businesses as prices at the pump cannot possibly be passed to customers. Increases in shipping are also dramatic further eroding profits and margins.
There are still potential opportunities for businesses in a recession. Let's all face it we are clearly in a recessionary period at this point even though we do not yet meet the classic criteria. With each new day the data gets a little worse. The concern for everyone now should be a much greater fall or perhaps collapse. The Fed is clearly signaling they are concerned by almost doubling the amount of cash auctions in March to compensate for the continued constriction in the market.
I think many of the businesses still going strong are waiting for the other shoe to drop. Although strong to date through traditional person to person selling our promo items business must expect a slowdown to commence at some point in the near future. In the meantime we've redoubled our person to person selling which is still lending substantial success and growth in these difficult times. The old meet and greet and telephone sales are still working but the effort has had to be dramatically increased. With the current slate of bad news no doubt we will have to keep increasing our efforts to match the decrease in economic growth.
