Adjust Your Sails for 2013

Aug. 10, 2012
Look beyond the headlines to take advantage of growth opportunities.

Business-to-business spending, as measured by Nondefense Capital Goods New Orders (excluding aircraft), is growing at a noticeably slower rate.  New Orders on an annual basis are still a healthy 7.1% ahead of this time last year, but the rate of rise is diminishing.  This may be why some people are mistakenly using the R-word (recession) while the U.S. is still growing.

Manufacturers are reputedly slowing down on capital goods orders and hiring decisions owing to uncertainty over the fast-approaching U.S. fiscal cliff.  You can thank Dr. Bernanke for that term.  The fiscal cliff refers to the total impact of the combined tax hikes and automatic spending cuts, which total more than $600 billion.  The impact of these measures will reputedly push the US into recession early 2013.  Do not believe it.  The impact from either, or both, will take time to register throughout the economy.

Instead, use the next four quarters of economic expansion to boldly go after your competitors.  The timid will not have the means to attract new customers, nor will they have the desire to attract the best available talent.  They will also not have the desire to spend the money to train new hires in preparation for the post-2014 economic expansion.

The US economy will be expanding for approximately two to four more quarters.  Take advantage of that time to outmaneuver your parsimonious competitors.  This is not the time to lower your sails in advance of the storm, but rather it is time to adjust your sails and take maximum advantage of the prevailing winds.

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