Here we go, the final installment of business writer's Phil Perry's story on the economic forecast for 2009. The first three segments of this story can be found here, here and also here. Perry also worked up a short sidebar that appears at the end of this post.
Weathering the storm
How to stay afloat in rough seas? Keep looking for ideas in technology and system improvements to get more done with fewer labor hours. This has been a winning tactic in recent times. Productivity increased by some 3 percent in 2008, according to Economy.com. That’s an improvement over the 1.41 percent of 2007. And there’s more good news ahead: Productivity growth is expected to increase by some 2.5 percent in 2009.
Want another profit strategy? Look to foreign markets. Exports are expected to increase by 6.9 percent in 2009, according to Economy.com. While that represents a moderation over the 8.78-percent increase clocked in 2008, there is still room here for new players.
“There is great opportunity in export-related capital goods,” says Simson. “If you make a widget that Europeans can buy I would get distribution in Europe as quickly as possible. This is a wonderful time for exports. It will be the only game in town for the next three years.”
The good news for exporters is that the dollar, despite some recent strengthening, is expected to remain weak against the euro in 2009. By the end of the year it will take $1.39 to buy what a single euro can, according to Economy.com. That represents only a minor strengthening over the $1.52 clocked in 2008.
As you enter the new year, avoid panic and remember that you can’t cut your way to profitability: You also have to create new initiatives that boost rounds by offering customers real value. But plan those moves carefully, keeping one eye on the risky environment. “Be sure of your projects before you invest in them,” says Simson. “Take a second look at everything. If you don’t keep the shower curtain inside the tub you may end up with water all over the floor.”
And now, that sidebar I've been talking about ...
All eyes on the economy
It’s always smart to keep a watchful eye on the economy to assess its expected impact on your operations. As we enter 2009 a few numbers will be more important than others, given our current economic crisis.
“Early in 2009 people will be looking at housing prices, at the unemployment rate and at retail sales and consumer confidence,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com, a research firm based in West Chester, Pa.
Here are some good places to keep up to date:
- Housing prices. Monthly reports are available from the National Association of Home Builders. www.nahb.org.
- Unemployment rate. Get the latest labor figures at the Bureau of Labor Statistics. www.bls.gov.
- Retail sales. These are tracked by the U.S. Census Bureau. www.census.gov.
- Consumer confidence. See The Conference Board’s continually updated figures. www.conference-board.org.