‘Gut’ Feelings Don’t Reflect True Reality of Economy By MARX ACOSTA-RUBIO Thee Chicken Little “sky is falling”, method of managing your company may be effective in keeping certain CEOs and CFOs vigilant. However, as time has proven, it is a very ineffective way of growing your company and viewing the current economic situation. In the March 29 article “Economic Gut Feelings Take Turn for the Worse,’ reporter Shelly Garcia claims that certain business leaders have a “gut feeling” that the economy is doing worse than we may believe. The article claims we should ignore “the relentless stream of data that shows the economic picture is improving.” She cites the opinions of certain individuals, and tries to make a weak claim as to why their gut feelings may be more of an accurate indication of what’s going on. Now, I don’t know about you, but I wouldn’t want a doctor to operate on me based on gut feelings, would you? Let’s first examine what gut feeling is. Gut feeling is your subconscious and conscious mind coming together based on your entire life’s history and memory to give you a feeling of certainty about something. This does not imply that gut feelings are accurate, or inaccurate. It does however, matter of fact suggest that gut feelings are nothing more than a personal feeling for that specific individual. I have polled my colleagues who own/run a variety of businesses in everything from real estate to video conferencing. Some do business locally in the Valley, and others work with the “world economy” in import exporting. All could not disagree more with the article. Transitioning economy I think what we are seeing and what those quoted in the article are “feeling” is not that the economy is doing worse than it seems rather a transition is taking place in how the economy is behaving. The economy is demanding a change, in some industries more rapidly than others. If those changes do not occur it will create very difficult times for those in that industry. Corporations are not being stingy with their dollars. Steve Villoria, CEO and founder of American Media Design (AMD) who specializes in business communication and videoconferencing had this to say: “The reason AMD was hit by the economic downturn is that a slow economy focuses corporate America on short-term financial performance. Discretionary spending on high-ticket internal resources (like what AMD provides) completely dries up as it creates a short-term negative impact on their bottom line. In an economic upturn, such acquisitions are justified on the long term performance realized through increased efficiency. AMD just finished its strongest quarter in years as evidence of this climate. “Next, the article quotes someone regarding empty containers going back to China at port and the export of manufacturing jobs abroad. First of all, Maersk Sealand, one of AMD’s clients is currently rolling out the largest shipping port operation on earth in the Port of Los Angeles, based on the increased demand on trade. What the article fails to recognize is what authors like Alvin Toffler, and John Naisbitt pointed out decades ago: ‘America is heralding in the information age. Measuring trade deficits based on physical goods is an obsolete concept. The information economy output of this country outstrips its deficit many times over.'” Sue Fries, owner of Ecola Termite Company, a local termite company, joined in with “March was an all time high in sales since 2001.” This means consumers have more discretionary income, and are eager to spend it in an optimistic fashion by investing in their own homes. John Spach, of John Spach Financials that specializes in retirement funds handling over $50 million has never been so busy. “I truly believe the days of the generalist are over,” he said. “There will be Home Depots and Costcos but in the private business world owners and CEOs need to define their niche and brand themselves my ‘gut’ tells me the economy is doing well. If the number of new cars, remodels and crowded mall parking lots are any indication of public opinion then I would have to say our economy is thriving.” Darren Campbell, managing director of RE/MAX Commercial Real Estate had this to say: “The economy, both real estate related and beyond appears to be strong with little end in sight. Real estate values continue to rise and are bolstered by low interest rates as well as a clear shortage in the supply of housing on each socio-economic level. Furthermore, rents have risen more than 10 percent annually in the Los Angeles apartment market each year for the past eight years, yet vacancy levels remain at historic low levels (currently under 4 percent countywide). “The Gross Domestic Product is rising because the economy is in fact thriving. Employment for skilled labor and highly specialized employees is strong and rising. This merely points out a growing truth; a person’s level of education and specialized training will predict or even dictate that person’s opportunity for prosperity more than ever in the history of this country. Many industries are experiencing slow growth simply because of a permanent shift in industry in the U.S. We will continue to derive less and less of our GDP in the U.S. from goods manufactured domestically. Thus, manufacturing jobs will continue to be exported while U.S. employees will continually have to develop more sophisticated skills to remain gainfully employed. The trend of transplanting manufacturing facilities overseas to minimize labor costs is not fad but rather a fundamental shift in the global economy. “Savvy foreign competitors will rapidly replace U.S. firms who fail to follow suit. It has become (sometimes painfully) apparent that American factory workers are going to be forced to develop different skill sets to survive the repositioning of labor in the corporate food chain. People with defined skills and specialized areas of expertise are in high demand and continue to experience increases in overall income levels. “So rather than there being a looming recession, there is a major re-positioning underway. If we fail to begin to retrain and prepare unskilled laborers for this shift, the chasm between the affluent and the poor will widen beyond our imaginations.” Marx Acosta-Rubio is the CEO of One Stop Shop, a computer peripherals marketing firm in Chatsworth.
