7 tools to gauge the direction of the economy and 1 thought on rising ransomware attacks

CPA and author Gene Marks says government statistics are politicized and lagging, and economists don’t have all the answers, either

SAN DIEGO — Columnist, author and small business owner Gene Marks hates to use the word “uncertainty,” but there was no getting around it this year, especially back in November. 

In a presentation prepared for Contemporary Design Group’s first virtual annual conference on the heels of the Thanksgiving Day holiday, Marks laid out some of the unknowns. What will be the impact of millions of people traveling and getting together during the holiday? Are virus cases going to spike? (They have.) What about the vaccine (two have  since arrived) and the new administration coming in? When will we see an economic recovery?

Everyone from Harvard economists to the U.S. Treasury secretary have weighed in with their opinions on the latter and where the economy is going, but the truth is none of the experts really know, Marks said. How could they? How could anyone? “We haven’t seen a pandemic in 100 years,” he said. It’s new to everyone.

Yet business leaders, like those attending the retail buying and performance group event, need to know what’s next in order to make good decisions about hiring, about spending, about deciding they’re staying put or “running for the hills.”

The latest government statistics show promise and suggest things are on the mend. There was a big jump in third-quarter GDP, for instance. The Federal Reserve’s “Beige Book” reports some industries are now struggling to find workers (something the furniture industry knows well). The unemployment rate is ticking down. Personal saving rates have shot up and retail sales are on the rise.

While these are all interesting statistics, Marks said, they’re not great future indicators. What’s more, they’re politicized, he said, and the numbers get revised numerous times so they’re hard to follow and “kind of lagging.”

Not to worry, though. Marks offered his own set of seven metrics (actually recommended to him by economists and other friends) that he suggested conference attendees follow, too, to better gauge where the economy is going. Most of them appear to be free, though some require a subscription or membership.

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The Open Table State of the Restaurant Industry. Open Table is an online restaurant reservation service company that takes its data on reservations in major markets across the country and internationally and shares it with the world. This one is indicating bad news, Marks said, showing the initial Covid drop off the cliff, followed by somewhat of a recovery but then a trend back down with the latest round of lockdowns. Reservation levels were still down to 50% of where they were before Covid, which suggests there’s still a lot of room for a recovery.

“When you see the (reservation) numbers start to spike back up, (that) shows you people are going out to eat, feeling more comfortable spending more money,” Marks said. That will be a strong indicator the economy is recovering.

TSA Traveler tracks the numbers of travelers passing through U.S. airports daily When Marks made his presentation, the most recent dates were just before Thanksgiving, which showed about 900,000 passing through vs. the more typical 2.2 million. A quick look Monday showed 1.07 million travelers on Nov. 25 (the day before Thanksgiving. On Sunday Dec. 20, there were 1.1 million travelers, vs. 2.5 million for the same weekday a year ago.

“We’ll be watching it close over the winter as vaccines are coming out.” Marks said, adding that hopefully, things will start getting back to normal into the spring and deeper into 2021. (Note: some links provided are to organization homepages, not full reports.)

The ISM (Institute of Supply Managers) service and manufacturing business conditions index. Every month this association of purchasing managers from around the country publishes data after surveying members on their buying plans over the next 30, 60 and 90 days. The good news, Marks said, is the numbers aren’t bad at all. They took a hit early into the pandemic, but then spiked back to 2018 and 2019 levels. (It appears you’d have to be an ISM member to get all the details.)

National Federation of Independent Businesses (NFIB) small business optimism index. The 30 million small businesses in the United States employ more than half the working people in the country, Marks said, so when they’re feeling good, that’s another good sign. And, perhaps surprisingly, they’re feeling pretty good according to the monthly index. Despite everything we’re reading about restaurants and the travel industry, overall confidence levels are back where they were a year or two ago, he said. The index dipped a couple of points in November, according to the latest report, but still remained above the historical average.

That National Assn. of Home Builders Confidence Index. Marks noted a lot of businesses of all sizes are reliant on the construction industry’s prospects (count home furnishings among them). NAHB’s monthly survey takes a read of the construction industry’s confidence, which is at a historic high. 

“So as retailers and restaurants and some other industry are really suffering during the pandemic, the … homebuilding industry has been rocking and rolling,” Marks said. And it’s indicative of the future, not just what happened in the past.

The American Chemistry Council has been producing its monthly Chemical Activity Barometer (CAB) for decades. Marks noted how everything we wear, touch and often eat has some sort of chemicals in it, so this another metric worth following. The barometer dipped during the pandemic and has since ticked back up but not to previous levels. It rose 0.8% in November on a three-month moving average but fell 2.4% year-over-year.

The Baltic Dry Index is an index of freight costs for shipment through the Baltic Sea. The higher the index, the higher the cost for freight, reflecting greater shipping demands. Again, after a big pandemic dip, the index saw a jump back to previous levels, which Marks said suggests good news for global shipping, (though some in the industry may beg to differ).

One final but unrelated thought from Marks’ presentation to CDG: Ransomware attacks are up sevenfold since last year, and he warned convention attendees not to become victims.

“Your business could shut down perhaps forever if you are,” he said noting that the problem has been exacerbated during the pandemic by the people working from home, “downloading dopey stuff” or maybe giving their kids access to their computers.

One simple preventative measure is to make you’re running the most up-to-date version of your computer operating system, he said. It’s an easy fix and while it’s no guaranty again an attack, it makes it a lot harder and makes you less attractive to hackers who find it easier to prey on people running older systems that are easier to compromise.

For more on recent cyber attacks in the furniture industry, check out Steve Silver’s summer attack and what the company did about it and a recent intrusion at Century Furniture.

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