>The Tatum/Roulston Report

October 13, 2009

>The Tatum survey this month clearly reflects that businesses are not in the typical mode of positioning their companies for recovery. Current trends are mixed with a lack of consistency by sector and industry. Perspectives indicate regional factors, government behavour and the financial instituional environment weigh heavily on the corporate outlook.

Backlogs have shown improvement as the significant slowdown last fall and winter has now rightsized inventories and corporate overhead. Expense reduction seems to be largely completed to a level that most companies are not cutting further at this point. Instead they seem to be waiting for an indication of better things to come. The Tatum Survey indicates some pent up need for modest capital expenditures for companies to start to maintain maintenance but not much more. Backlogs are up to replenish inventory pipelines, but a lack of confidence in future visibility is clearly widespread. Continuing capital availability concerns weigh heavily on this economy and most concerning to us is that its difficult to identify any factors that will adjust this environment.

Although the markets have bounced back to reflect maybe an overreaction to the downturn, Wall Street seems to have an uncanny confidence in historical precedence that has a disconnect with Main Street. We have written before that the difference between recession and depression is emotional. Middle America has reacted to the market meltdown, unemployment, government activism and lack of access to financial credit much differently than the East Coast. With the exception of export driven stimulus from the weak dollar and some very isolated individual company(seemingly not even industry wide) recovery, the environment is very sluggish.

Confidence in any government action to improve the sentiment is not only non existent, its sarcastic. With virtually no banking predictability most companies are experiencing very little forecasting capability. Optimism is common, but with very little tangible eveidence of sustainable stability. With the last year’s experiences still freshly in the rear view mirror, pundits that believe recent history will not be a lasting scar just don’t understand how a dog feels after its owner kicks it. The thought process that the economy will soon be back on a historically comparable trend is somewhat ignorant of the effects of the emotional meltdown we saw over the last 12-18 months. It takes time to forgive and forget unless you may not believe things broke down in the first place.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: