Bonnie,
It may be that many companies are holding on until the last minute, hoping things quickly turn around. Many of these smaller publicly traded companies must have at least some retained earnings they can feed off of, short term, plus generous credit lines from their magnanimous bankers. Labor IS tight, for now, and the smaller companies must be loathe to do lay-offs just to have to turn around and attempt rehires should the situation suddenly improve. Also, there is a lag factor in reality and government statistics, perhaps as much as two or even three quarters. I would expect that if trends continue at present rates, we will be seeing substantial changes in employment figures by Q1/Q2 '99.
I live in Minneapolis. There is a very large, privately held, multi-national corporation headquartered here named Cargill. Many people have never heard of them, even thought they have annual sales in excess of $50 billion. They are something of a conglomerate, but their core businesses include grain trading and shipping, value-added food processing, and a very successful financial arm. It would be difficult to sit down to a meal prepared in ANY part of the world in which Cargill has not had some involvement.
Well, their annual earnings were reported this week as being down 43% year-over-year. Now, keep in mind, Cargill is PRIVATELY held. Unlike many publicly traded companies, they have little to gain by either under-reporting or over-reporting the reality of their bottom line. It is my assertion that, when this company is doing well, the general economic climate is OK, as Cargill is something of an unbiased barometer of global commerce. When this company is not doing well, I can only conclude that the opposite may well be true.
I don't think we're in a correction. :o( |
