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RHL 2012 predictions and game plan

31 Jan

Preface

The economy is stuck in neutral or worse, it is slipping into a second recession (don’t mention the word “Depression“, but many citizens are whispering just that word). American politics shows both major political parties in an unflattering light, leaving most voters scratching their heads and wondering what the heck is going wrong. So what are we to focus ou energies on in 2023 in order to set ourselves up for a prosperous year?

The following is our attempt at setting priorities and focus in our business group for the year. We recommend that you, your family, and your businesses do do something similar for the following each year (also sounds like the New Years’ promises):

– review of your goals for the previous year
– review of what happened during previous year (outcomes)
– list most likely macro-economic events of the coming year
– goals for the coming year
– activities to accomplish those goals
– resources needed to reach those goals

For those of you involved in business budget preparation, this should look familiar. Should we really do this for our personal lives and family life – absolutely! Think about the benefits if your children knew what your family was trying to accomplish during the year, just like employees, I think that they do better when they know (simplified) where your family is going.

I will assume that you have reviewed your goals for the previous year and found the ones that you achieved (the outcomes), congratulations, and the ones that were not achieved.  The ones that you or your business / family did not achieve are the important ones because they tell you where you or your business were deficient.  Reviewing some of the macro economic events of the previous year might explain why you did not achieve some of your goals – here’s my review of those events…

Macro Economic events of 2011

I am reminded of the priceless line from Good Morning Vietnam wherein Adrian Cronauer describes the weather, which in this case I have replaced with the economy, “I just want to begin by saying to Roosevelt E. Roosevelt, what it is, what it shall be, what it was. The [economy] out there today is hot and shitty with continued hot and shitty in the afternoon. Tomorrow a chance of continued crappy with a pissy [economy] front coming down from the north. Basically, it’s hotter than a snake’s ass in a wagon rut…“. The economy has gone from bad to worse, except if you listen to President Obama and the Pollyanna economists out there who say that we have officially made it out of the recession (don’t think that I blame the Democrats alone, as the Republicans are spending as quick as their rivals). Here is my recap of this year’s world events that have affected you somehow:

(1) Unemployment rate ending the year at 8.6% (U.S. Bureau of Labor Statistics), which I believe belies the large number of individuals underemployed and on hugely elongated unemployment benefits.

(2) the U.S. government continues to spend like a drunken sailor, (White House OMB) “2011 Projected Deficit: $1.645 trillion, 10.9 percent of GDP; 2012 Projected Deficit: $1.101 trillion, 7.0 percent of GDP; 2015 Projected Deficit: $607 billion, 3.2 percent of GDP; 2017 Projected Deficit: $627 billion, 3.0 percent of GDP“.

(3) Political finger pointing has made this a great year for the American public – without a reason to compromise, nothing much has been done. Automatic cuts kick in, etc.

(4) The Arab Spring began to show that democracy in the Middle East is a mixed bag – undesired parties [by U.S. interests] tend to be voted into power, and new regimes provide an ever changing landscape.

(5) Businesses continue to experience tighter credit.  Anyone in business has experience empirical data on this.

(6) Large businesses are sitting on piles of cash (USA Today article), but if you look at the books in depth, their net worth continues to dwindle due to heavier debt loads (if you can get it, get it; refinance if you can at these incredibly low rates; we have nothing better to do with it right now, and we are unsure of investment right now).

(7) Anything energy related is booming. Drilling in the South Texas Eagle Ford Shale and North Dakota Bakken Shale formations continue to have huge job growth. Oil field service companies are growing exponentially – Fracking is big business.

 

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Posted by on January 31, 2012 in BLOG

 

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