Here's macro economic analyst Danielle DiMartino Booth a few days ago. She's on a Blockworks Macro podcast, calling the beginning of what has been the most anticipated, and then forgotten, recession in history. Why? Among all the other economic indicators, the U.S. unemployment rate ticked up to 3.9%, which is half a percent higher than the April 2023 low of 3.4%. In addition, Jeff Snider, a super smart guy, whose YouTube channel focuses on educating people about the Eurodollar system, also called the beginning of the recession last Friday. So there are two very smart macro economic people who both said the recession has begun, on the same day.
To the bond market, which is many times larger than the stock market, and where the Big Money invests hundreds of billions of dollars every year, this news signaled that The Fed is finally DONE hiking interest rates. When this news hit, the key 10 year U.S. treasury bond started selling like hallucinogenic mushrooms at a Grateful Dead concert. The big money players, like hedge funds, major investment funds, pension plans, insurance companies, and the like, now are as sure as possible that The Fed won't be raising interest rates anymore, which made it a good time to stock up on longer term U.S. bonds. When bonds sell a lot, this drives their interest rates they pay down, and the 10 year T-bond went from topping 5% interest down to around 4.5% interest, in a couple of days. That doesn't sound like much, but it's a huge move.
All that jargon means that the world's biggest investors think that interest rates won't go up significantly from anytime soon, and that's interest rates will move down next year. That's the good news. The bad news is, The Fed will pause interest rates, keeping them where they are now, for a while. During that pause, all hell's going to break loose in the economy and the financial markets, and we will plunge deeper into a recession. Nearly all major economic indicators have been pointing towards a recession for over a year now, most getting worse, then a little better, then worse in again September and October.
What does this mean for everyday working people? There will be a lot more layoffs coming, across many different job categories, so be a better employee that your co-workers. Banks have been tightening credit since the bank failures in March, so it will be nearly impossible for many people (and small businesses) to get loans or new credit, and it will cost more interest for people with really good credit who can get loans. The overall money supply, the total amount of U.S. dollars that exist as bills or digitally, has been declining, which hasn't happened in the U.S. since the Great Depression of the 1930's.
Because people (and businesses and governments) have so much more debt now than in the 2008 recession, a lot of people won't be able to make all of their payments. So there will be a lot of people selling all kinds of items, to raise cash to pay bills, from clothes, appliances, and Star Wars collectibles, to cars and houses. Many of these will be people who got laid off, or in households where someone got laid off. Debt becomes a huge anchor, dragging people and businesses down, when one or more sources of income get cut off. There are several economic signals that consumers, by and large, are about tapped out now.
When consumers stop spending as much money (including loan money, which is now much harder to get), then businesses make less money. When businesses make less money, they cut back on costs, and need fewer employees. When consumers and businesses both cut back on spending, then cities, counties, states, and the federal government make less tax money, so those different levels of government have to cut back. The federal government can try and get The Fed to print more money, usually. But if they do that now, it will make inflation start heading back up before too long. That's the last thing federal officials or The Fed want now. So they're stuck letting recession play out.
This means more individuals and businesses will go bankrupt, which is already happening. The entire banking system has been propped up since March, when the first three banks failed, with the BTFP program, and by The Fed's own stats, over 700 U.S. banks are on the verge of bankruptcy themselves. Now, your accounts are insured by the FDIC, up to $250,000, so if your bank has issues, it will probably be bought or merged with another bank, and then that will become your new bank. But when things get sketchy enough, The Fed will do a bigger bailout of the whole banking system, and probably several major businesses again, like in 2020-2021 (and 2008-2009). They always do. But with the current Congress, there's no chance of major stimulus programs for everyday working people, and probably not for small businesses, until at least spring of 2025, and that's only if we wind up with a mostly Democratic Congress and White House. Republicans, as a rule, don't back stimulus programs for individuals. Early 2025 is a long ways away.
We're going into a gnarly recession, that's reality now. The stock market is still snorting Hopium, pretending everything's OK, but that won't last much longer, and reality will hit the stock market as well, before long. As a normal person, the recession basics are to pay off any debt that you can pay off, particularly high interest credit cards. You want to keep your job stable, and cut back on every day expenses, where it makes sense. That's Recession 101. Those of you who remember 2008, 2000, and the early 1990's know that. The rest of you will learn as time goes on. I quit a job in 1990, at age 24, when that recession began, and bought food with credit cards for a couple of months. I learned real quick how stupid that is, and carried that debt for quite a while. I soon learned how to live real cheap, even to the point of living in a house with 7 to 11 roommates at times. It's hard to beat $100 rent in a recession.
There's a whole lot more going on in the Big Picture with this recession, which I've been writing about for 4 years or so now. Check this blog post from March 2019, "Our economy is powered by unicorn farts." That was written nearly a year before the pandemic hit U.S. shores. I'll be writing some more about the Big Picture aspects of this recession as times goes on. For now, the news is, the real world data suggests that the long awaited recession is here. The much anticipated and then dissed Recession of 2023 has begun.
This is the Google Trends search history chart for "Give back car," from January 1, 2004 until this week. For comparison, the Great Recession/Global Financial Crisis of 2007-2009 is near the left side of the chart. Millions of people have bought cars they can't afford since the "Stimulus Baller" days of late 2020-2021. The car repo market has been going gangbusters this year, according to car industry guy Lucky Lopez, on his YouTube Channel. (11/9/2023)
Here's the Google Trends search history chart for "Give back house," also from January 1, 2004 until this week. Millennials and a few high earning Gen Z people are learning the hard way that buying a house with a 3%, thirty year fixed mortgage, isn't necessarily a good thing, if you bought at the peak prices of a 13 year housing market during the crazy FOMO phase. Can you say, "2024 foreclosures?" I thought you could. (11/9/2023).
Future trends and economic cycles are something I've been learning about and fascinated by since the late 1980's. I've linked many of the sources of info above, and will link three really good economic outlook podcasts below. I've been studying these trends for 30+ years now. I have a much better idea what's coming in the next few years most people, just because I've been into this stuff for so long. I've had trouble earning a decent living after taxi driving died, so steady income is my issue these days. But, I know where to look for opportunities as this chaos plays out. Time will tell if I'm able to take advantage of very many of those opportunities.
Here are my three favorite macro economic analysts, each in recent, long podcasts, going into a high level of detail about the current state of the economy in late 2023.
I've begun writing on a new format called Substack, and I've written about a whole bunch of topics over the first 30 posts. Substack is more focused on writing, and you can subscribe (for free) to have my posts come straight to your email. After trying out the platform for a couple of months now, I've decided to focus mostly on creativity, writing, art, and creative scenes from now on. If that sounds interesting to you, check it out.
Oh man... The 1980's. Yeah, that's me on the right, running the Ferris wheel at the Boise Fun Spot, making $3.10 an hour as a manager with 13 employees under me. That's three of them hoping I don't stop the wheel when they're on top, L to R, Kim, Michelle (I think), and Pam, my girlfriend the summer before this. Yeah, 1985, I was all about the Op short shorts for guys. Jeez... Photo by another employee, Vaughn Kidwell.
Business question. You run a local fast food chain restaurant, which of these customers is the most valuable to you?
- Crusty old man: He comes in every morning, buys a coffee and a cheap breakfast sandwich, $3.50 total, 7 days a week, and then talks to a couple of friends for 2 or 3 hours, and then leaves.
-Working woman: She comes to your drive-thru 4 days a week on average, every week, and buys a $3 coffee drink, and a $4 breakfast sandwich.
-Family of four: They bring the kids once every two weeks, the parents each get an $8 combo, and each of the two kids gets a $5 kids meal.
-Traveling baseball team with adults chaperones: Twelve of them pull off the freeway, and everyone gets an $8 combo. They live in another state, and never come back.
The restaurant's employees should be professional to everyone, unless people are complete idiots. I've worked three years in restaurants, and dealt with the public in other jobs. There are a bunch of idiots out there, the customer IS NOT always right, and shit happens. But being rude, screaming at, and actually fighting customers ALWAYS costs the company money. Sometimes a huge amount, in lost business. That's my point. I get treated like shit all the time, at restaurants I spend a lot of money at. Yes, I'm currently homeless, and I sit and "work" for a couple hours usually. I'm polite, I don't steal, I pay for my stuff, I throw my trash away when I leave. Hell I even put out a fire at a McDonald's the other day. It was a tiny bush fire from a careless cigarette, no big deal, but I'll be helpful now and then if needed. I get along with the employees for the most part. I'm pretty much the crusty old man. Yet, I get attitude from managers ll the time. Of the four examples above, that's the one most like to get an employee acting rude to them.
So what does the restaurant lose if they piss off these customers, and they go somewhere else?
The Working Woman wins, she brings $1,456 annually to the restaurant. You give her a hard time the one time she brings a cold sandwich back in and asks for a new one, this business is out nearly $1500. Ouch.
The Crusty Old Man comes in as the second most valuable customer, with $1,277.50 in annual business. He doesn't buy much at one time, he sits there a lot, but he brings a good chunk of continual, and dependable, cash to the business, just like the Working Woman.
The Family of Four is the most likely to be seen by managers as the "prime customer," managers tend to think these groups are their "bread and butter." They're important customers, but they bring in $676 annually, less that half of the money the Working Woman or the Crusty Old Man spend.
The Traveling Kids' Baseball Team is a boon to the restaurant's daily numbers, but their one time spend of $96 pales in comparison to the regular customers, and that's my point. I haven't seen a fast food manager in a long time who understands this basic concept. If you had to piss off one of these customer/groups, it's actually the best to have the big spending Baseball Team upset, they're never coming back anyway.
My point... take care of your regular customers, the best you can. Teach your managers to do this. You'll make more money, which is the point of a business.
I got my first taste of running a business a week or two before I turned 18. As a graduating high school senior in Boise, Idaho, way back in 1984, I got a job at the Boise Fun Spot. It was a cheesy little mini-amusement park, inside Julia Davis Park downtown, near the Boise Zoo. We had two kiddie rides, a Merry-go-round, a kiddie roller coaster, a Tilt-a Whirl, a Ferris wheel, a snack bar, and a miniature golf course. My friend Doug, also 18, was the manager. He actually managed the day-to-day operations. The Fun Spot was owned by a man who ran a local construction company. He'd found, that with good initial training, kids that were 18 or 19 could actually do a good job running this small business.
Doug got a higher paying job working construction, and tapped myself and this high school junior, Brian, as co-managers. He'd been training us all summer, and we took over. Tim, the owner would stop by in the mornings, drop off the cash drawer, ask how things were going, and then go run his construction company. He stopped by randomly, and for big repairs, but that was it. We ran the place.
So as I was turning 18, I got a raise to $3.05 an hour. Federal minimum was $3.35, but the Fun Spot, because of some Idaho farm worker law, could pay $2.05 an hour. That's what my employees were making. I made the (ahem) BIG BUCKS. Suddenly I had 13 employees under me, 5 acres of grounds to keep up, rides to run, and a business to make a profit at. Tim looked for young people who wanted a chance to be a boss, and took it seriously, and Brian & me, for the most part, took it seriously. That's the best business experience I could have had at that age.
Now, in my sketchy current situation, I spend a lot of time in fast food restaurants, either doing my artwork or working on the computer. McDonald's, about 12 years ago, made a brilliant corporate decision, to position themselves as a inexpensive alternative to Starbucks. Smart move. They started selling fancy coffee drinks, but $1 to $3 cheaper than Starbucks, they made a more lounge type store, added TV's, added wifi later on, and got rid of the playlands.
I know this, because I was having a breakfast in a McDonald's in Huntington Beach, CA when they were planning one day, explaining the new concept to the manager of that restaurant. But most managers today, don't seem to have been told this, and all fast food places just have a bunch lazy, unprofessional, largely incompetent people, and one or two good employees. The managers, and I'm talking all fast food places, simply aren't taught to be managers in most cases. One out of every 6 or 8 does a good job. They can to the paperwork needed, but not actually RUN a business well, which is their actual job. If you don't run your business well, especially in this transition time when new technology is changing business practices, then you go out of business eventually. We'll see what happens with fast food places. I think many big names will fold a lot of stores in the next decade.
I watched (OK, mostly listened) to this a few days ago. It's a really good, and inspiring, in my opinion, look at small business in America today.
Three years ago, I was living in a toxic environment, not getting calls back for any "real jobs" I applied for, and need to find some way to start earning a living again. I started with literally no money, just a few art supplies and a really crappy, refurbished, laptop. It was still running Windows XP in late 2015, that's how ancient my computer was. I think Fred Flintstone had traded it in.
Back then, I started focusing on making money with my unusual and unique Sharpie artwork, the only thing that made me a little money now and then. It's been a wild ride, and I never started making a decent living off my artwork. But I did sell around 100 original drawings in three years, starting at like $20 each, and I used Facebook, my blog, and other social media to promote myself. I created a ton of content, anyone can see nearly all of my drawings on the internet and about 4 other platforms. I got really good at a thing called "content creation." Other than people adding outside drama to my life, my main issue was that my artwork isn't profitable enough to make a drawing that takes a week to draw, and then sell it, and have the money to pay everything I need to.
So after surviving a really rough, crazy winter, in a new city, I did some soul searching. I realized that very few small businesses do much in the way of content creation, even though it's free. It just takes some time to create. Many things don't take that much time. You can snap a quick, cool pic in your business, and upload it to 3 or 4 places, in a couple of minutes or so. So I realized I can keep drawing, but on a less intense level, and take my internet and social media ideas and skills and help small businesses implement them. So that's where I'm headed, again starting a really low financial level. But I now have a body of work, both my artwork, and the online content I've created, to show that I know what I'm doing in these areas.
With this pivot in my work, I'll be blogging a lot more about small business ideas I have, stories of small businesses I've worked at, and creative things we did at those, and I'll be sharing things I find along these lines. This is a good one to start with. At 27 minutes, it's along watch for most of your busy lives, but easy to listen to while doing other tasks. Plus the last blog post took me two days to write, and I've got an offline project taking most of my time at the moment. I need a quick post today. So enjoy this documentary for now.
In 1987, I started a new job as the newsletter editor for the American Freestyle Association, and moved to Huntington Beach, California. I didn't have a car, my life was all about BMX freestyle, and I soon found the place to be was on the pavement below the Huntington Beach Pier on the weekends. There were a one or two other BMX freestylers there every weekend, and a handful of freestyle skateboarders. I started hanging out, became a local, and that was my spot every weekend there wasn't a contest to go to. It was a tall guy named Mike Sarrail, and me on bikes, and Pierre Andre', Don Brown, and Hans Lingren on skateboards most every weekend. Since it was a well known bike and skate spot, there were lots of riders and skaters stopping by for sessions, as well.
Freestyle skaters were the dorks of skateboarding then, doing tricks on flat ground with no ramps. They didn't go big, it wasn't mind blowing, but they did the hard, technical tricks that took longer to learn than other aspects of skating. The emerging genre of street skating built, almost entirely, upon the standard freestyle skating tricks.
One day Pierre Andre', who was French, said, "Hey, I found a company in France that wants to start making skate shoes." He'd just come back from a trip home to France, and I didn't think much of it at the time. Pierre, Don, and Hans were all sponsored by skateboard companies under the Vision umbrella, and Vision's new clothing company, Vision Street Wear, was making skateboard shoes they got free. The shoes had a couple good ideas, like ollie guards on the side, but were pretty uncomfortable and didn't last all that long. Since Vision sponsored the AFA contests, that I helped put on, I, too, got free Vision shoes. Not great, but free was good in those low income days.
There was definitely a need for much better shoes, shoes specifically designed for skateboarding (and maybe even BMX riding). A lot of BMXers and skaters wore Van's shoes then, which worked well, but they were not designed specifically for skateboarding at that point. Pierre, the top freestyle skater in France, like all freestyle skaters, had a perfectionist side, and he went to town working with the French shoe company, Etnies. The shoes they came up with were a huge leap forward in skate shoes.
The big initial blast for Etnies came with this classic skateboard video section, where pioneering street skater Natas Kapas wore some of the first Etnies. The shoe company was off to the races. Pierre soon bought them out, headquartered the new company in Costa Mesa, California, blocks from the former Vision main office we all frequented for years.
He worked his ass off, and built a HUGE, amazing company. The parent company, Sole Technology has had revenues as high as $200 million a year, before the Great Recession, and they built not only two huge buildings that you see in the video above, but they built one of the best skateparks in Southern Califrnia, for the city of Lake Forest, right down the hill from their HQ.
We could never pronounce Pierre's last name correctly in the 80's, so he went by Pierre Andre'. But now, Pierre Andre' Senizergues, my old buddy from years of weekends hanging at the H.B. pier, is a prominent entrepreneur and visionary in the highly entrepreneurial region of Orange County, California. He's one of dozens of people I hung out with who started small businesses, most of which are still in business, and some of which are huge now, 30-some years later. These are the people I was surrounded by in my 20's and 30's, all because I started doing tricks on a "little kid's bike" while in high school in Idaho.
My path has been a weird one. I wanted to start my own business in the 80's, but I was super shy, and just couldn't do the salesman part. If you don't sell stuff, you don't have a business. It's as simple as that. So I spent the last 33 years or so reading hundreds of books, a huge number of them about business and personal development. I spent a decade as a sidekick to several young entrepreneurs in the actions sports world, working and brainstorming with them day after day. Along the way, I worked on the crew of several TV shows, a different kind of entrepreneurship. The whole time, I was also working on my personal issues, and eventually ended up a taxi driver in the early 2000's. It's not a prestigious job, in fact, taxi driving operates as a small business, not a job at all. It's in the gray area between a job and a business. I learned to hustle my ass off, find business in weird places, pay $3600 in overhead a month, and I overcame my Rainman like shyness, as well.
But I didn't pay attention to emerging technology, and the taxi industry got disrupted by new tech, even before Uver and Lyft. I wound up homeless. The decade after has been a big struggle, where, among other things, I couldn't get hired for any "real" job anymore. I started blogging in 2007, and a couple years later began to self-educate on how "this whole internet thing" works, and how it has completely changed the way business happens in the U.S. (and most everywhere else).
In late 2015, I was living with my mom after my dad's death, in a small North Carolina town, still unable to find a "real job." My mom is continually in fannacial crisis, so any money I made, was immediately needed for some "emergency." Literally without a dime to my name, I started focusing on the Sharpie artwork I did to start earning money. I've struggled for the three years since as a working artist. But I did start selling artwork. I've sold around 100 original drawings in the last three years, starting at about $20 each, and they sell for $150 or more now. But they take me 35 or more hours to draw. There's just not enough profit, or enough work to sell, to really get me going again financially, without a $10K loan to set up and really do it right. So, as I struggled to survive this last winter, homeless and in a city I'd brand new to me, I started looking at my options.
While I haven't made a decent living selling my artwork, I did learn how to promote and use blogging, the internet, and social media well...for free. When I look around at nearly all of the small businesses, here and elsewhere, hardly any of them are using today's new media and platforms at anywhere near full potential. And that's what I'm pretty good at now. Look up my hashtag, #sharpiescribblestyle on Instagram, Google images, or even Facebook. My Sharpie art has a really solid web and social media presence, better than many mid-sized businesses. Any business can do that, but most are too busy, with their day to day running of the business, to take the time to learn how to use all these tools more effectively. So I'm going to start teaching them.
I'm writing a small book right now on how to use the internet and social media effectively for small business, and how to actually get more sales, not just media hype. Hype is good, but it don't pay your rent or buy you food at the grocery store.
I'm also going to pivot this blog to focus much more on ideas for starting, building, promoting and marketing small businesses. I'm still going to write and old school BMX story or two each week, and I'll still have my artwork on here when I do new stuff. But I'm scaling that back. Looking at my own current skills, drive, and ambition, and the Big Picture of the next decade or two, small businesses will be a huge, possible the deciding factor, in getting the American economy working well for average people again. There won't be millions of factory jobs paying $32 an hour coming back. We have to rebuild this economy ourselves, and small business is the best way to do that.
So that's where I'm at. My book, in a self-published form, will be available soon. I'll keep you all updated. I don't know where all this will lead. But then, I didn't know where it would lead when this guy below told me he found a shoe company in France that wanted to make skateboard shoes 32 years ago. And that turned out pretty well.
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