Archive for the ‘Brian’s Blog’ Category

The Sun Rose November 4th. Thank a Veteran.

Monday, November 9th, 2020

Despite the rumors of massive unrest after the election, the sun managed to rise on Wednesday morning.  And Thursday morning.  And Friday morning.  I’m pretty sure it will continue to rise.  Even after Joe Biden was announced as the next president, there have been no major riots that have been reported.  Should we be grateful we live in a country that allows us to PEACEFULLY protest and demonstrate?  Yes. 

It is fitting that Veterans’ Day falls after the November elections.  (It is also fitting that 2020 has a crazy election.)  Exercising our rights to vote can be an ugly process.  It is quite sad how ugly we can make it.  But it pales in comparison to the ugliness many of our veterans have experienced.  I wish we could honor them by being civil towards one another, even if we disagree politically.

In the meantime, thank all the veterans you know.  Their sacrifices allow us to engage in the experiment we call democracy.  Let them know you appreciate the fact that you can vote and express your opinions.  Say thank you on November 11th.

Yes, It is the Most Important Election of Our Lives

Monday, November 2nd, 2020

I get a kick out of the pontificators that remind us that the 2020 Presidential Election is “the most important election of our lives.”  They have said the same thing in prior elections.  They will say the same thing in 2024, 2028, and on forever.  Each time the talking heads say that with their over the top gravitas and as if they are marking a profound statement, they are correct.  Why?  Because we cannot change what happened in the past, nor can any politician.  We can change what happens in the future.  Politicians’ decisions change what happens in the future.  Therefore, the next election is more important than the previous election. 

I have become a believer in the saying that the most important decision in your life is what you do next.  Yes, choosing a spouse is important.  Yes, choosing a vocation/career is important.  I am quite confident that many small decisions led up to those big decisions.  Also, once you make your big decisions, it is what you do next in your life that matters most.     

If you have not already, please take the time to vote.  Take a few minutes to contemplate what else you should be doing in your life.  The most important thing you can do in your life has not happened yet.  Make it happen.  Make your life worthwhile. 

Be Prepared for Shipping Challenges

Monday, October 26th, 2020

Last week, UPS and Fed Ex basically told their customers they are sold out through the end of the year and are essentially putting customers on allocation.  YRC Worldwide, one of the largest LTL (less than truckload) carriers is facing a “liquidity crisis” and is relying on the government to keep it solvent. In a time of tight capacity, any issues with YRC will create tremendous challenges for other carriers that are struggling to meet demand.

For years, business freight has subsidized consumer freight.  That paradigm might be ending.  Business to business shipping has the advantage of route density (think of industrial parks and office buildings when they used to be filled) versus business to consumer shipping where houses are spread out.  As I have written before, consumers have gotten spoiled by free or low shipping rates. 

It does not take an economics major to understand that supply is tight and demand, particularly for direct to consumer deliveries, is accelerating.  This scenario will ultimately lead to higher prices.  My fear is higher prices are the least of our worries.  Shipping delays will wreak havoc on supply chains that are already challenged.  Start making contingency plans.  The holiday shipping season is going to be fun! 

You Just Have to Look Outside

Monday, October 19th, 2020

One day last week, my wife and I were up early.  We turned on the television and put on the news.  The weather forecast was on.  With confidence, the weather forecaster said, “It will be a great start to the day with rain moving in late afternoon.”  My wife looked out the window and said, “What is she missing?  It’s going to rain any minute.”  I left for work and, sure enough, within 5 minutes, it started to rain.  I called my wife and we had a good laugh about it. 

Later that night, we were talking about the weather forecast.  I told her I wanted to turn it into a blog but needed a hook.  She said, “Sometimes, you just have to look outside.”  I am sure the fancy weather models showed rain moving in late in the day.  It did not take a fancy model to look outside and see the dark clouds.  It certainly did not take a meteorologist to predict it was going to rain soon.

We are inundated with data and messages.  The amount of information available to us is staggering.  All that information can prevent us from seeing what is really going on.  We also allow so-called experts to guide us.  They suffer from information overload as well.  Take a trust but verify approach with experts. 

In this work from home environment, it can be tempting to rely on surveys to see how your customers and employees are doing.  They are a tool, just like radar.  But, just like radar, they might not tell the entire story.  If you do not look outside the spreadsheet and slide presentation, you might miss what is going on.  Don’t get caught in the rain. 

Reach Out to Someone

Monday, October 12th, 2020

I was recently in a store looking for something my wife needed.  Of course, the store I went to did not have the item.  I was in line and called my wife.  I got off the phone and an older woman in front of me in line (properly socially distanced of course) said, “Excuse me, I overheard your conversation.  You might want to try going to…”  We have a 3-minute conversation about the state of the world.  She ended the conversation by saying, “Thank you for talking to me.  I enjoyed our interaction.”

I know nothing about this woman’s life other than what I can speculate about.  I came to the conclusion that she was probably lonely.  We are entering into our eighth month of partial lockdowns.  I think we are all feeling a little lonely.  We are all grasping for hope for a treatment or vaccine, something that ends this pandemic and gives us our lives back.  It seems like that might be a long time away. 

When the lockdowns started, there was hope.  It was going to be a few weeks.  Then we had to wear masks for a few weeks.  In Ohio, the governor said there would be a mask requirement for 3-4 weeks in July.  It is October and we are still wearing masks.  Some areas are starting shutdowns again.  People are losing hope. 

Call someone you have not talked to in a while just to check in.  See how they’re doing.  Ask if you can help.  Give someone a little hope.  We all can use it. 

Don’t Miss the Boat

Monday, October 5th, 2020

I recently took boating classes.  (I digress.  I am not generally in favor of more regulations, but it boggles my mind that any yahoo can drive a boat with no training.)  I was talking to a good friend and experienced boater.  He told me the first rule of docking: “Never try to dock a boat at a speed faster than you’re willing to have your boat hit the dock.”  This time-tested advice is true in boating and is a good analogy where we are in the economic recovery.

I sense that fear is building in the economy.  Questions are being asked.  Is a second wave of coronavirus coming?  Will more lockdowns occur?  When will we have a vaccine?  Are there going to be more riots?  Are the elections going to be a disaster?  (If you’re not scared after the debate, you’re lying.)

Layoffs are increasing.  Banks are reluctant to lend to new clients.  All this adds up to an economy stuck in neutral that might even start to go backwards.  If your business made it through the first wave of coronavirus, you are being careful not to crash it in the second wave.  Everyone is proceeding cautiously.  Caution is good when you are docking a boat.  Caution is sometimes necessary when running a business.  But when every business is cautious, the economy slows down.  My gut tells me we are entering a period of being inundated with bad news and talk of a recession.  Persevere.  The economy might be heading towards the dock but it will eventually start to grow.  Don’t miss the boat.  We will have growth soon. 

Pay Attention to Freight

Monday, September 28th, 2020

I will again recommend you subscribe to the Cass Freight Index email.  It is a free subscription and a tremendous source of information on the economy.  From the latest issue: 

For carriers, revenue per shipment (simply the expenditures index divided by shipments) trends have reversed and are increasing due to rising trucking rates, as there are real constraints on driver and industry supply presently. We don’t see much capacity entering or returning the rest of the year, so as supply/demand remains tight, expect continued growth in the average freight bill. (Emphasis added)

I have espoused enough on inflation.  Every good we purchase is transported to us.  We have all been spoiled by “free shipping,” especially during the pandemic.  There is a cost associated with moving goods and it is going up.  Therefore, the cost of goods is going up at some point (and Amazon will again raise its Prime membership fee). 

As the Cass report indicates, freight volumes are going up.  That is a positive sign for the economy.   The report also notes that an “inventory dump” is occurring on the West Coast.  If businesses have learned one thing during this pandemic is just in time inventory does not work when shutdowns occur.  I am sure there are a slew of consultants promulgating the value of safety stock and providing executives with fancy spreadsheets that show the cost of inventory vs. the cost of a lost sale.  The inventory build will continue.  That trend, along with supply constraints, will support the trend of rising freight rates. 

We Obsess With Precision When Trends Are What Matter

Monday, September 21st, 2020

I had my annual physical last week. Because of family history of heart issues, I take my blood pressure on a regular basis.  I reported my home readings to my doctor. 

Of course, the first test when I walked in the room was taking my blood pressure.  It was high.  The doctor and nurse said they would retake it at the end of the exam.  After my exam ended, they put me in “time out” for 10 minutes.  I had to sit and relax by myself.  I kept my phone in another room.  Ten minutes later, my blood pressure was “excellent.”  My doctor explained that the 120/80 blood pressure that is now considered normal was taken from a study where people sat for 10 to 20 minutes prior to the blood pressure being taken.  I wonder if the companies that sell blood pressure medication talk about that part of the study’s protocol. 

From an early age, we are bombarded with the importance of precision.  There is one correct answer on a test.  Questions we are asked require yes or no answers. We applaud scientists and pseudo-scientists (economists) for giving us precise numbers on topics that are difficult to understand like climate change and economic growth.  We stand in awe of their confidence when they report numbers that have decimal points to us. 

Trends can get lost in our quest for specific, precise answers.  Isn’t it more important for my health to measure my blood pressure over time than once a year at a physical?  Isn’t it more important to focus on the trend for the economy than a quarterly number that is reported out 3 decimal points?  Can anyone, let alone the government, provide a real GDP growth number that is that precise?   

Over these next several weeks, we are going to be inundated with facts and figures about the economy and about coronavirus.  You will be better served focusing on trends rather than specific numbers.  Anyone who reports a specific number with confidence to you has an agenda.

The US Fiscal Stimulus Response to Covid is Staggering and Growing

Monday, September 14th, 2020

I recently read a commentary from Gary Shilling, an economist.  Shilling wrote:

Fiscal stimuli alone equal 12.3% of U.S. GDP, the largest of any major country, according to the International Monetary Fund.

Wages and salaries are down 5% this year, but with all the government supports, total personal income is up 5%.

Not that I doubted Gary (He is excellent and worth reading.), I provided source links below.

Keep in mind a few things:

  1. The fiscal stimuli referenced above is above and beyond “normal” government spending.  This doesn’t include social security, Medicare, Medicaid, defense spending or any other regular government spending.  That adds another 21% or so, meaning the government is now accounting for over one-third of our economy. 
  2. By all accounts, another stimulus bill is in the works.  This one is expected to be at least $1 trillion more.  Remember when “a billion here and a billion there and soon we’re talking about real money” was the saying about government spending?  Now we throw trillions around like dollar bills.  Honestly, I don’t think most people (including me and I’m a borderline economics nerd.) can comprehend these numbers.
  3. When has a government program ever been cut?

The best way to get out of this mess is growth.  For growth to occur, we need population growth and an environment that encourages risk taking.  We have neither.  We also have two political parties willing to spend right now.  There is no traditional conservative voice with any clout talking about reigning in spending.  Ugh.

The spigots in Washington DC are open.  I don’t see them being shut off anytime in the foreseeable future.  We won’t know when the well runs dry until it is too late.  That is a scary thought. 

The Energy Inside Schools is Contagious

Tuesday, September 8th, 2020

Our son recently started high school.  He’s going half days with half the school.  Despite the limitations, the experience is energizing him.  While I am sure there will be days he dreads going to school, right now he is excited to go. His excitement energizes us. 

I have always been amazed at the energy within schools.  I have volunteered in schools.  Every time I leave a school, I feel better than when I walked in.  Kids are inquisitive.  Kids know how to have fun.  Kids want to get better.

So how did we lose that spirit?  Why do adults dread going to work?  How do we create work environments that replicate the energy in schools?  If work environments were more welcoming, productivity would increase.

As I (and many others) have written, the biggest positive of coronavirus is it gives us a chance to do things differently.  Let’s take a lesson from schools and make work environments more positive.