The economy continues to be stingy in its latest rounds of figures, in some areas taking back what is handed out tepidly on a platter. Business and government leaders wonder when the “trough” will come and some have even coined the expression “Black October” not for its menacing stock market suggestion but for the month of the year where finally profits are predicted and amazingly realized.
We have been tracking the combined figures of both the Institute of Supply Management (ISM) in this blog and elsewehere, as well as the rapidly developing rate of personal savings. If there is a silver lining it is that Americans finally seem to be remembering what personal savings is and that personal savings is indeed a good thing.
(Read the monthly economic report: http://www.newportconsgroup.com/files/PR-2009-07-01_Key_Economic_Indicators.pdf)
The motivation to begin to place bets and send business investment north has been tempered however by a not so unfamiliar seasonal spike in unemployment figures, particularly in the service industry where the summer months generally realize a slowdown. High unemployment figures spell trouble for state and federal tax coffers and an increased spend in unemployment insurance, a one-two punch particularly for cash-strapped states.
(Read about unemployment figures released: http://www.msnbc.msn.com/id/31704515/ns/business-stocks_and_economy/)
Califonia in fact is on the verge of taking the tact of increasing furloughs, closing parks, and issuing IOUs for its contractors and to the counties. In an ironic move that is sure to elicit images of “stealing from Peter to pay Paul,” six of California’s state parks, originally federal lands, contain deed clauses for the parks to remain open in perpetuity lest they be transferred back to federal ownership. Can the Feds really afford these parks and keep them open any more than the Governor?
(Read about how the Feds may run Six State Parks http://www.msnbc.msn.com/id/31693419/ns/travel-news/)
While the hunt for Black October continues, state and municipal governments plan for the long downturn in funding to last for several years. The best possible option is for manufacturing to rebound, draw in more services, and start replenishing the depletion cycle we have seen for the past year.