August was quite a month for me and my business. Brutal, brutal heatwaves kept my customers inside or down the shore. A semi-serious earthquake disrupted a work week. A major hurricane shut things down for a few more days. And those were the good things that happened this month.
For the economy, August was not a good month.
Not that there weren't some bright signs. Durable goods orders came in pretty strong. Personal income and expenditures were both up. Consumer delinquency rates fell to pre-crisis levels. Commercial property prices rose. The Baltic Dry Index rallied. WalMart reported higher profits. Leading indicators were up. Oil fell to $81 a barrel. Kate Winslet had her life saved by a naked Richard Branson. Yes, he was naked.
And yet as disturbing as that image seems, most of the economic data from last month was worse. Standard & Poor's, a firm who failed to warn us of the credit problems in our financial services industry actually downgraded our government debt... and the markets actually paid attention to them. Inflation and unemployment rose. Small business optimism dipped for the fifth month in a row. Regional Feds in Philadelphia, New York and the Midwest reported contractions in activity. Unemployment stayed above 9%. Auto traffic and truck tonnage indexes both decreased. The construction industry continued on life support with architectural billings, housing starts, and existing home sales all down. Even Steve Jobs is giving up. Steve Jobs!
And to add salt to our wounds, the Fed revised its estimate of annual GDP growth downwards from an anemic 1.3% to an embarrassing 1.0%. My hair is growing faster than our economy. And I'm bald.
But hold on. Because September is potentially shaping up to be even more disruptive for my company. In fact, as we approach Labor Day I can name at least seven upcoming events this month that will likely impact my company well into 2012.
For example, the debt "super" committee will be meeting and making decisions about how our government should cut the deficit. Their deadline is November 23rd, but they'll be in the news a lot this month. Now, take a look at these guys. I'm pretty sure none of them have ever been described as "super" before in their lives. You know they're loving the attention. Unfortunately, most business owners like me won't be loving them. This bi-partisan (but VERY partisan) committee has been charged to either agree on a solution or there will be across the board cuts primarily in defense. Anyone want to guess how this will play out? The expectation is, like it always was, that this "super" committee will not achieve super results. Instead we can expect token gestures of deficit cutting with the rest coming from the military. Meanwhile, China builds new ships and missiles and Russia lays claim to pieces of the arctic. Few think that these members will be able to step up to the problem of entitlements which today accounts for more than 40% of our government's expenditures.
The decisions (not) made by this group will affect our national debt well into next year and beyond. Which means my business can expect more potential uncertainty by way of currency de-valuation and the prospect of higher taxes.
Secondly, there should be a Federal 2012 budget approved. That's because our next fiscal year begins October 1 and we still don't have a budget. Since last spring our government has been fighting over spending freezes and debt ceiling caps...all related to LAST year's budget. If you remember, the President introduced his budget for 2012 over the winter, with billions in projected deficits. That budget was voted down by Congress unanimously. The Republicans, led by Paul Ryan, unveiled their plan which was met with similar disgust from the other side. But we need to have a budget in place by October 1, the start of the next fiscal year. Will there be new taxes? Will entitlements be cut? Will healthcare reform be part of the discussion? Will there be funding for education? Energy? Will we ever get to see those pictures of Condoleezza Rice that that Gaddafi kept in his photo album? September could be a very interesting month indeed.
Next, the Phillies will be making their postseason run. Everyone's expecting big things from my hometown team this year. As a lifelong fan, I'm kind of mixed about this. On the one hand as long as their pitching prevails and their core players perform they've got a huge chance to bring home another World Series championship to a city that is starved for champions. So there could be lots of happiness and celebration. On the other hand if they hit a wall and don't make it to the World Series their very fickle fan base may start throwing batteries at them next year. And going to less games too. Which could mean more tickets available for me in 2012...at lower prices. Look, I want them to win like anyone else, but who can afford to drop $500 every time you want to take your family to a ballgame?
Also, the Fed may be taking some action. Last week, Chairman Bernanke gave a much anticipated speech in Jackson Hole outlining his thoughts on the economy. He left all options open. The economy is weak and slow and doing terribly. The Fed does not have a magic wand. But they do have options at their disposal, particularly injecting more money into the system by buying securities. They've already done this twice before with not much to show. But Wall Street likes easy money, because it deflates the value of the dollar and drives investors into stocks, causing market increases. It's possible, if the economy continues to struggle, that the Fed will so something. So my stock portfolio could go up in 2012. But all that easy money could cause inflation and interest headaches too.
Well, whatever. At least a new season of Dancing With The Stars will premiere September 19th. Is there anyone who won't be tuning in to see Chaz Bono take a few turns on the dance floor? And will Casey Anthony come out of hiding to heckle and boo Nancy Grace? This is drama at its highest level. If the show lives up to its expectations I can expect many hours spent away from work, glued to the TV and on online chat forums discussing each episode. That's not a good recipe for a business owner in these tough economic times. But....hold on. Did I hear David Arquette and Carson Kressley are on the show too? How can I miss this? I guess with all the distractions this Fall I can expect to pay big time when my pipeline comes up dry in 2012.
Another thing happening this month is President Obama's "big" speech on "jobs." Another jobs speech from the President? I think I've seen this show before. And here's how it ends: badly. We're not really sure what his plans are, but trust me when I tell you it won't be free. Whatever funding his jobs programs will require will need to come from somewhere and be paid by someone. Which will probably impact spending and taxes in 2012. I'm sure he'll emphasize training and provide more enticements for businesses to hire. Has anyone in Washington figured out that in an economy that's growing at a 1% rate we don't need to hire more people? Most of us aren't looking for enticements to bring on more employees. We'll happily do that without any tax treats if there was more work to do. Look for these proposals to be mostly short term gimmicks aimed at doing something quick and meaningless to lower the unemployment rate as we head into the 2012 election season.
But I've saved the best for last. Because in mid-September there will be the long-awaited (at least by me) release of Piranha 3DD. That's three double-D in case you weren't paying attention. The movie's promotion promises lots of "blood and boobs." I'm in. If this movie is anything like its brilliant predecessor Piranha 3D, then I can expect to be spending lots of time and money in the theatre this Fall reviewing its finer cinematic points and investing heavily in future DVD versions that will likely be released in 2012. Maybe I'll even have special screenings in my office. C'mon... the economy is slow. My business is slow. We all need something to occupy our time, right?