NFIB

El Niño Economics
09/ 18/ 2002

by Harvey King

Mark Twain could have been referring to the economy when he observed, "Everyone talks about the weather but nobody does anything about it."

I discovered this during a recent two-day marathon of cable TV surfing. Jumping back and forth between CNBC and the Weather Channel, I determined they're both the same channel, only with different graphics behind the blow-dried anchors.

All day long, each channel's "on-air personalities" point to projected images of moving statistics and animations. The hosts then check in with reporters in the field (or on the floor) with questions about how folks on the scene are coping with the effects of this morning's tornado (or the release of the Fed's beige book).

Then the professional analyst from the National Hurricane Center (or Morgan Stanley) weighs in with his or her observation that there is the possibility of all types of results from this morning's events, ranging from the destruction of the coast of Florida to the storm blowing out to sea; and from the sell-off of the market to a 52-week high of the Russell 500. After an hour of this, you know to prepare for a flood or drought, a rebound or a lull. In other words, you can't do anything about either.

Farmers have long known that the weather and economy are inextricable. In biblical times, Joseph used his gifts for long-range weather predictions (the Dreamtracker 600-BC®) to develop his successful commodity options-trading strategies. But for those of us in the contemporary service sector, this whole weather thing is a new and challenging metaphor.

After careful research, I've determined that it is explained something like this: During most of the 80s and 90s we were lulled into thinking our businesses would be helped by the steady, gentle breeze on our backs. But then came the Perfect Storm: The popping of a speculative bubble. A stock market downturn. A recession. Tight credit. Tight capital. A month-long electoral and constitutional dilemma. A longer recession. A national tragedy.

Then the economy entered a new weather pattern: The Perfect Calm, during which anyone with corporate decision-making authority headed for the storm shelter. A worldwide war. A series of corporate scandals. Endless earnings warnings. No "visibility." A large area of economically stagnant high pressure hung over the nation.

What's next? I can tell you where not to waste your time: The Weather Channel or CNBC. I prefer the local channels these days. When a storm pops up, they feature weather "tracking" radar systems that display in real-time the street-by-street movement of a storm. No predictions. No analysis. Just: "Here's where the storm is: head for the basement."

It's that way with small businesses. While predictions of global economic patterns make the national news, the most critical information necessary to survive the good times and the bad are the facts you can track within your specific industry niche, your hometown, your own company, your family, yourself.

As for me, I'm ready for a gentle breeze to be at my back, but I still have my umbrella handy.

Harvey King can be reached at hking@mybusinessmag.com.

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This article originally appeared in the August/September 2002 issue of MyBusiness magazine.

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