If you read the business section of your local newspaper this morning, or even the Wall Street Journal, you may think it's the beginning of the end. “U.S. Manufacturing Shrank in June,” “First Slip in Three Years Signals Decline in Economy,” “Factory Slump Reaches U.S.,” etc. These are the messages the newspaper editors chose to bring you from the news release put out by the Institute for Supply Management.
Yes, ISM did report yesterday that economic activity in the manufacturing sector contracted in June for the first time since July 2009. But here's what else it reported—right up front—that the newspapers I read either didn't mention or decided to bury:
“However, the overall economy grew for the 37th consecutive month.”
Neither did the gloom and doomers in the mainstream media quote any of the following ISM sources:
"Business is still strong, with some nagging question whether it will be sustained." (Machinery)
"The economy and general business seem to be getting better even though recent data say otherwise." (Fabricated Metal Products)
"Local labor market shows no signs of slowing down. Competition for technical services/skilled craft remains tight." (Petroleum & Coal Products)
"Although our shipments are up year over year and from prior month, we can feel some head winds, especially from Europe. "Business continues to exceed forecast in all markets." (Primary Metals)
"Economy seems to be slowing slightly due to concerns in Europe; however, production has not changed a great deal." (Transportation Equipment)
Yes, this is a mixed bag of outlooks—but certainly not the Armageddon the newspapers would have you buy. A couple weeks ago I shared economist Alan Beaulieu's take on the next 20 years. He's president of ITR Economics, which has racked up a pretty impressive record of predicting ups and downs. He believes we're in the midst of a vibrant recovery for manufacturing, and that with banks flush with cash, and expectations that interest rates will remain “stimulative” through 2013, your competitive advantage lies in financing needed capital equipment purchases instead of waiting for a guarantee of smooth economic sailing.
Prophesies of doom are more likely to come true if you let them. If you use recoveries to get healthy, chances are you'll weather any sniffles along the way. Remember those stories of the Y2K Bug that predicted computers all over the world would crash and society as we know it would revert to that of our cave-dwelling ancestors once 1999 changed to 2000? Aside from some minor glitches, that New Years Day was characterized by sighs of relief as much as shouts of “Happy New Year!” That's because rather than panic, smart business people had been taking reasonable steps to prepare their software for any glitches the new millennium's rollover might bring. This is called business prudence. Companies that learned the lessons of Y2K have survived to apply them another year.
That opportunity came quietly last week when such companies lived through an extra leap second unscathed by the aging process. What happened was that a "leap second" was added to the Coordinated Universal Time to adjust clocks to the earth's rotation the night of June 30. This delay in the transition to July 1 was too much for some software to handle. Browsers like Firefox and social news network sites like Reddit reported software glitches.
AFP, one of the news feeds I follow, quoted Mozilla engineer Eric Ziegenhorn as saying "Java is choking on leap second." It also reported that some services using the Java software platform were malfunctioning. Funny thing is, these outages happened at about the same time a major U.S. storm knocked out power to an Amazon data storage site which serves as cloud host for many websites.
So was it the leap second or the leaping storms that caused technology to teeter? The same news report I cited above also gave props to Google for being prepared for anomalies introduced by Y2K-like and leap-second-similar bugs. In fact Google has been prepared for the most recent of the 25 leap seconds added since 1972. Google engineer Christopher Pascoe credits their weathering this ticking little time bomb to "one of our coolest workarounds."
"The solution we came up with came to be known as the 'leap smear,'" he explained. “We modified our internal NTP servers to gradually add a couple of milliseconds to every update... Google engineers developing code don't have to worry about leap seconds."
The lesson to be learned here is that by preparing for and making incremental course adjustments, in business and in life, you can fulfill a prophesy of success while those who are more reactive either freeze in fear or retreat from reality until assurances of fair weather come their way. Those assurances will never come if they keep burying their heads in the newspaper.
Related Editorial:
New Equipment Finance Activity Trends Positively
