- US GDP growth is close to stall speed, and Current US policies are not pro growth (GDP growth: 2011 1.7%, 2012 YTD 1.75%)
- China's slowing growth (year over year June 7.6%, lowest growth since 2009)
- The Euro zone challenges, particularly Spain and Italy, producing a breakdown in the Euro
I am an optimist. I think the coming US election will improve policies. I think the Euro zone will continue to muddle through. I think China will navigate its economic transition and at a minimum stay above stall speed.
However, I anticipate the real economy (the one we operate our businesses in vs. the stock market) can do no better than remain just above stall speed for about another 12 months. Additionally there's a more than nominal a risk of falling below stall speed triggered by one or more of...
- Euro zone chaos
- China's failure to manage a smooth transition from decades of high growth to slower or negative real growth (real growth is nominal growth minus inflation)
- Military conflict with Iran
- US failure to sufficiently deal with its increasing fiscal pressures
- Another unspecified Black Swan
- Minimize or eliminate short-term and/or variable rate debt
- Minimize inventory levels
- Reduce receivable days outstanding
- Adjust staffing to be at or even slightly below what you think you must have
- Focus on new offers, practices, narratives and strategies that produce competitive advantages for your enterprise
- Dialogue with your trusted advisors on your specific situation
- Execute sales agreements with your customers through at least mid-2013 if possible
- Keep commitments to your suppliers short-term
Turbulence is life force. It is opportunity. Let's love turbulence and use it for change. Ramsey Clark
I continue to anticipate a period of great opportunity (US) for knowledgeable business owners who are situated to move with the positive forces. Now is a time to be as prudent as you can be to preserve and, if possible, increase power.
Supported by my key advisors, I will be dialoguing with those in our configuration on the coming Joseki View conference call–our periodic practice of reading the world, or anticipating the drifts of the key forces of economics, politics, technology, demographics and competition we see most consequential for private enterprises.
Photo: Flickr User/finalRiddler