Top of the news: I know you want to find bottom — but it’s just not there yet. The Conference Board reported today that consumer confidence fell to a record low in February. This isn’t surprising considering average Americans have seen their portfolios and housing values vaporized and are worried about layoffs. The consequences for Washington state are particularly ominous, considering the state’s dependence on sales taxes. Just as demand for government services rises, tax revenue falls off.
Fed Chairman Ben Bernanke doesn’t see daylight until 2010, telling Congress that the economy is suffering through a severe contraction. A key question for Seattle becomes: How much damage? Will we lose another major headquarters, along with scores of local small businesses? And can we stay competitive while every aggressive rival in the world will be going after our assets? Even Arizona is talking about forming a push to become a leading aerospace center. Don’t laugh. Leaders can die of a thousand cuts.
Behind the news: Much mordant humor could be launched by Microsoft CEO Steve Ballmer’s comment that this isn’t so much a recession as a “reset.” It’s like a reset where the screen stays blank, you can only get a recording from the help desk and the CPU down on the floor is smoking. In fact, Ballmer has been one of the more realistic — and downbeat — business leaders about the state of the economy, something reinforced today when he told financial analysts, “I think the economy will be relatively weak for a relatively long time.”
Earlier, Ballmer has said he sees the economy going through “a fundamental economic reset.” He told House Democrats at a retreat earlier this month that this disruption can be likened to 1929, 1873 and other severe, and world-changing, downturns. He’s right. The future — including where opportunity lies — is in discontinuity. He’s particularly correct to focus on the unsustainability of debt. Relatively speaking, of course.
Taking stock: Yesterday the S&P 500 closed at its lowest point in 12 years. We’ll see if today is a dead-cat bounce or a real steadying of the market. RGE Monitor points out that January’s 8.6 percent decline in the index eclipsed the January 1970 nosedive as the steepest drop for the first month of the year in the 81-year history of the S&P 500. Who’s going up the down staircase? Amazon shares are up about 24 percent over the past two months, while the S&P has fallen nearly 15 percent.
Today’s Econ Haiku:
What does Commerce do?
Once a sleepy department.
Hope Locke paid taxes