The economy – is it *really* that bad?

Something I’ve been having to wonder about is the economy. The news is filled with talks of impending recessions, and discussions that it’s too late to do much about it.

However, my business, Adaptive Path, and all similar businesses of which I’m aware, are overwhelmed by work opportunities. We’re all turning down leads left and right (and, believe me, we’re grateful for the situation we’re finding ourselves in).

The thing that confuses me is that consultancies such as Adaptive Path tend to be the first hit by any economic downturns — when companies feel the pinch, external spending is often one of the first things to go. Creative services firms of all types were hammered by the last bust, and definitely started feeling it before the rest of the economy. But we seem to be weathering this uncertainty remarkably well.

What’s going on here?

6 thoughts on “The economy – is it *really* that bad?

  1. oh that’s easy peter – cuts happen internally first that justifies outsourcing (you). when you get cut, that’s when things are really bad for your client. whatever contracts you have in place now they kinda have to honor, so i hope AP has engagements signed that last throughout ’08. also, budgets were probably set sometime in the middle of last year for fiscal ’08, so there’s still money to spend. your clients will feel the recession when revenue declines. that’s the beginning. but on a more optimistic note, i think if the external consultant is adding critical value to the client’s primary business model, they can’t live without you and will do what they can to keep you.

  2. The economy is weak in certain places and certain sectors. In Michigan, where my dad lives there is an across the board recession. Long standing business are closing, unemployment is high, and people are moving out of the state. If you look at the job opportunities in Michigan, the growth sector is in medical. However, that doesn’t help older and unskilled workers from the shrinking manufacturing sector.

    I don’t think we’ve seen the end of the real estate and lending problems. Its going to take a while for those bad loans to get worked out. Unfortunately, the more we do to delay that, the longer the recession will be. (Read up on Japan, its recession, and its unwillingness to write off bad debt.)

    I see no evidence of a slow down in the internet industry. Perhaps IPOs are fewer. Perhaps a credit crunch means fewer mergers and acquisitions. But, I think the internet industry is stronger than in 2000, because it is largely not based on those drivers now, as it was in 2000.

  3. Analysis Shmanalysis. The American economy is tied to the NFL. If the National Conference wins the Super Bowl, the economy is up. If the AFC wins, the economy goes down. For weeks now, The New England Patriots seem to have a lock on the playoffs, hence, the queasiness of Wall Street, unemployment and the retail sector.

    It’s up to either the Green Bay Packers or the New York Giants to get this country moving forward on Super Bowl Sunday.

  4. What’s inconsistent here?

    Budgets aren’t down. Budgets are up, due precisely to the inflationary business practices that economists are worried about. So, two things happen:

    1) Companies have more money to spend, on contracts with your company and my company.

    2) Assets are at risk of devaluing due to all this inflation, interest rate hike potential, loans being called in, etc.

    I don’t know the details, but I figure that it isn’t helping the economy for us to take contracts paid by loaned money in an inflationary environment. When everyone gets paid a lot, money is worth less.

    Don’t get me wrong, we’re taking those contracts too, but I’m not confident there’s anywhere safe to put the proceeds.

  5. O.K…. are you ready for the truth? the media that is fed to the world is primarily the equivelant of the sports comentator that is watching a game and has no idea of what is going on, fundamentalist(economists) really have no clue, the smart money is usually near the finish line when the media that is availiable to everyone thinks they have figured it out. I could go on and on however I will give you some quotes you can google if you like. when the stock market was in the 3000′s it was errational exuberance and the stock market is like a buble ready to burst,then in the 7000′s it was phrases like asian contagian. Then when the market continued to soar in the face of inflation fears and the impact it could have, the media called it a new economy and the philips curve that many had built there educations on in economics didnt apply any more, at that point we put in a top in tech stocks after moveing from under 1000 to 6000…. so my question is, is this new economy idea old???? or are we in a new new economy and that could be good. I know its confusing, I would suggest not paying any mind to the media and deal in the real world

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