Our very good friend Karl Palachuk posted an interesting blog as a result of what he calls a “disagreement” he and I had at the ICCA Conference in Washington DC last weekend. Karl says:
“Over the weekend I had a public disagreement with a friend over the economy. We both agreed that a recession is two or more quarters of negative growth as measured by GDP.
Facts are facts.
The economy grew slowly in Q4 of 2007. It grew very slowly in Q1 of 2008 (Just last week the adjusted rate was posted at .9%).
This quarter’s growth is expected to be even smaller. But it is expected to be growth.
No matter how small the positive number, growth is growth.
We haven’t had one quarter of shrinking GDP, let alone two.
I understand that gas prices are high and unemployment is up. But despite the hangover of the housing "crisis," there’s good news.
The Fed lowered interest rates and that will work it’s way into the economy over the next few months.
Overall, GDP growth for the year will be small — maybe 1 or 2%. But it’s not shrinking. Growth is growth.
The government stimulus package is kicking in. People are getting their "rebate" checks and spending them. That will help us all a bit.
And the silver lining of a weak dollar overseas is that U.S. exports are doing very well.
I am not an economist, but these facts are not hard to come by. You have to open the paper and get past the story about what Britney and Lindsay did yesterday.
Our economy is going through a period of weakness and slowness.
We are not in a recession.”
Read Karl’s entire post here.
I just had to respond to Karl’s post, because I speak to lots and lots of service providers and MSPU Members, and we do talk about the economy as well as a myriad of other topics. So I just couldn’t let Karl continue to profess that all is good in Whoville, just because we have not met the technical definition of “recession”. Most of you who I speak with have a lot to say about the pressure you’re starting to feel, and I wanted to give you a voice in Karl’s world, so here is my reply as posted to his blog:
“Hi Karl – I don’t think we had a public disagreement more so than I think you corrected a statement that I made during my keynote at the ICCA which I believed to be accurate – thank you. I quickly agreed with you on the technical definition of a recession, as illustrated on the slide I had up at the moment.
The core issue here isn’t about nitpicking a percentage of GDP growth (frankly a .9% figure is truly embarrassing, even to support your point, by the way), but what the environment feels like. You know, like "it’s only sixty degrees, but with the wind it feels like forty".
We may not technically be in a recession, but the Service Providers and MSP University Members I speak with every day are feeling the pinch. Sales cycles are growing longer, projects are being put on hold, and it’s tougher to get in the door of new prospects.
You’re in California just like me, so you’re no stranger to the $4.75 gallon of gas, nor are you unaware of the horrible housing market out here, which is at its lowest level since 1993, with foreclosures at their highest since record-keeping began in 1979. And I don’t need to throw in that consumer spending has posted its smallest gain since 1991 (I can hear you now – a gain is still a gain! lol).
I gotta tell you, Karl, we may not be in a recession, but for a lot of service providers and the smb business owners they serve it sure feels like forty degrees…”
Let’s get your feedback on this please – there’s a lot of discussion to be had on this topic.