With the stock market enjoying a summer rally and the recession looking like it’s coming to an end, it’s tempting to think about staffing up again–especially with the holiday shopping season just around the corner.
But if I were you, I’d think twice before putting that ad on Craigslist. Last week, the Commerce Department reported that retail sales fell more than expected in July while foreclosure filings soared, signaling that consumers–whose spending accounts for roughly 70 percent of U.S. economic output–may not be in a festive mood this season.
While the government’s “cash for clunkers” program succeeded in boosting auto sales, sales of furniture and home furnishings dropped 0.9 percent from June while electronics and appliance stores saw 1.4 percent declines. Sales at building materials, garden and supply stores–the retailers who cashed in during the housing boom–fell 2.1 percent. Even Wal-Mart took a hit.
That’s why a client of mine in Los Angeles told me last week that he has no plans to ramp up hiring–especially now that the recession has shown him that he can do more with less. When times got tough last fall, he and his partner decided to cut back their office manager to three days a week and spent $2,500 on an automated phone system that routes calls to their employees’ desks using voice prompts.
While business has picked up at their company recently, sales still aren’t where they were a year ago. And my client and his partner have learned the hard way that extra people don’t equal extra profits.
On the home front, my client has become more frugal, too. On Friday nights with his family, it’s good-bye Bennigan’s, hello pizza. Hiking has replaced shopping as the family pastime.
Of course, things may change by the time Thanksgiving rolls around. The holidays have a way of doing that to people. But for now, I’d take the good news you’ve been hearing from The White House with a grain of salt.
After all, if your business is struggling to stay afloat, what makes you think your neighbor’s business is doing any better? Or that either one of you will have lots of holiday jingle to spread around this Christmas?
This entry was posted on Monday, August 17th, 2009 at 9:43 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Leave a Reply
