In this sign, understand. Admittedly, a take off on Emperor Constantine’s “In Hoc Signo Vinces”, but one for the ages, we believe, because it reflects a paradigm difference in the view of economics.
What’s it about you ask? Simply, that unlike the myriad of economists, analysts and pundits that bombard the airwaves with their prognostications and oft times ridiculous predictions this Institute has used a rather practical method of understanding and predicting economic conditions with a greater than 98% accuracy.
How do we do it? The answer is simply that we have a Main Street, not Wall Street view of things that brings our perception of the economic conditions right out of the lofty, detached and aloof aeries of corporate finance to where the real people conduct normal, daily commerce.
Unlike self-professed financial wizards, we claim no special ability to read the signs in numbers or financial reports, but in fact, we read the signs in the daily performance of American, and indeed world commerce.
Our network of consultants, spread throughout the world feed us information, it’s true. Not the spreadsheets of global banks and balance sheets of international conglomerates; rather, we look at things like the sentiment of consumers in their spending habits at restaurants and retailers; and how they’re using credit cards in their lives.
We see the level of commerce not in global markets, but in the spice markets of Istanbul and Cairo, the food markets in The Bronx and Philadelphia; the prices being paid for wholesale foods in Denver and New Delhi. We watch for how they buy groceries, whether in the gourmet markets of Paris or New York, or in the supermarkets of New Jersey and Arizona, or the high streets of Britain. We look at how much the public, not merely Americans are traveling and where they’re going; how they shop and if they’re haggling prices more or skipping a purchase they clearly want to make but cannot afford.
In signs like these and the faces of people on the street and what they eat, we, unlike all those pundits you see on CNBC and CNN, have been able to accurately predict the trends in Main Street, and how they filter their way to Wall Street. We call it “trickle up economics”.
In November 2007, for example, Dr. Angelone planned a visit to Washington to meet with senior officials from the Senate Committee on Small Business to discuss how the economy was in a recession already and how the impact of bad lending was going to create an economic depression unprecedented in history. The meeting was held on December 3rd, and surprisingly, every single thing our good Chief Economist reported and predicted has come true.
We’ve all made statements, whether through this website or other forms of communication predicting with alarming accuracy, how the economy will react. For example, we wrote in this site on September 29th, 2008 that the purchase of toxic assets will not work because there is no way to properly price the assets, nor can they be bought in a timely manner to prevent what was then, a looming financial meltdown. Well, pundits kept up the pressure for those purchases and our new President and his economic team were in full support, but in the end, the President’s team realized what we wrote in September – it just doesn’t work.
Similarly, we predicted in early December 2008 that by Inauguration Day, there would be a significant drop in the DOW because of job losses and business failures. Well, January opened with a resounding bounceback to a DOW over 9,200, but on Inauguration Day, the figure fell more than 300 points, and was down, by that point, more than 1,000 from the high on January 3rd. How did we know and not one other pundit or analyst? Simply put, we saw how retailers and restaurants were remaining open on the skin of their teeth just to get through the Christmas holiday season, with full expectation of closing right afterwards.
We, unlike the television pundits, knew the impact of closing tens of thousands of small businesses was far greater than closing one or two offices of a few global companies. Sure the media covers the layoff of 4,000 here and 7,000 there, but they never cover the loss of 10 jobs in one store and 30 in that restaurant. But the little losses add up so we say “shame on you” to the pundits and producers of such shows that ignore Main Street and focus all their attention on Wall Street.
They forget that shareholders in large corporations are often the ordinary folks in the neighborhood and when they stop investing, things on Wall Street will suffer.
We don’t say any of this because we think we are somehow special or superior. In fact, we don’t think we’re any better than those analysts and pundits. Instead, we are saying to them, the television and print media editors, that it’s time to shift their focus off Wall Street and fully, without hesitation, to Main Street, with a global view of what’s happening in the neighborhoods around the world.
That alone, will give a bigger, broader and more accurate impression of the real economy than any rise or fall on the DOW, S&P or NASDAQ. Perhaps when the media finally starts to focus its attention where the economic crisis is hurting most, and where it not only happens, but started, then we might be able to focus on the more important solutions than executive compensation and whether banks sponsor ballfields.
We hope the media pundits understand, this is a Main Street economic depression, not merely one of corporate finance. They need to “get real” to the fact that when small town folks can’t buy products and services, and when small businesses fail, there are far fewer customers for the large corporations they pay so much attention to these days. Afterall, how long will companies operate if they lose their customer base?