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To: Lucretius who wrote (26877)	10/11/2000 1:54:30 PM
From: LLCF	Read Replies (1) \| Respond to of 436258

Everything looks rosy again thanks to productivity: <A quick scan of a variety of economic indicators shows there are other angles from which to view the future state of the economy without jumping to conclusions about the three Es. For example, productivity growth is trending upward, factory orders continue to rise, and inflation has been lower than expected. These indicators show that tech companies may exist in a market that looks far healthier than the one some speculative investors believe exists. More peripheral indicators of a healthy economy, such as housing starts and consumer confidence, remain strong. Even figures that indicate the economy may be slowing--for example, recent results for jobless claims, retail sales, and consumer spending--at least show that the descent would be at a pace the Fed often characterizes as a "soft landing."> <My Two Cents: The Perfect Storm? Is your company ready to weather the storm if the economy goes into a downturn? By Brian Gillooly "How do men act on a sinking ship? Do they hold each other? Do they pass around the whisky? Do they cry?" --Sebastian Junger, The Perfect Storm he trawler that is the U.S. stock market is riding a turbulent sea of crests and troughs straight into an angry confluence of three major economic conditions that will form the equivalent of The Perfect Storm. So say many market pundits, some of whom refer to these three converging conditions as the "three Es"--the euro, energy, and earnings. Many are predicting that technology companies and tech investors will be particularly susceptible to this impending storm. But is such a perfect storm really brewing? And why must the stock market be doomed to flounder rudderless through a market maelstrom, battering every company aboard and flinging some of the weaker shipmates overboard to certain death, when there are so many other signs that point to a continuing strong economy? Perhaps there are rough seas ahead for tech stocks, but consider that many major economic indicators, including some that directly affect the technology sector, point to conditions over the next several weeks and moving into next year that may not be quite as dire as some are predicting. To those who focus primarily on the stock market--particularly the tech-heavy Nasdaq--it's understandable to assume there are problems on the horizon. The Nasdaq is down about 17% since the beginning of September, and those three nasty Es--the decline of the euro, high energy prices, and soft third-quarter earnings--are likely to exact a heavier toll on all stocks near-term. Other indicators are also showing softness in the tech sector: Growth in PC and semiconductor sales are slowing; the meteoric increase in IT services revenue is expected to start leveling off; and there's some talk that R&D investments are shrinking. But there are also positive signs that indicate the foundations of a strong and sustainable economy are in place, and that's what should be buoying businesses and technology companies. A quick scan of a variety of economic indicators shows there are other angles from which to view the future state of the economy without jumping to conclusions about the three Es. For example, productivity growth is trending upward, factory orders continue to rise, and inflation has been lower than expected. These indicators show that tech companies may exist in a market that looks far healthier than the one some speculative investors believe exists. More peripheral indicators of a healthy economy, such as housing starts and consumer confidence, remain strong. Even figures that indicate the economy may be slowing--for example, recent results for jobless claims, retail sales, and consumer spending--at least show that the descent would be at a pace the Fed often characterizes as a "soft landing." One of the reasons for the popularity of the book The Perfect Storm is that author Sebastian Junger dares to probe the difficult issue of how humans respond when faced with the inevitability of an untimely death. What goes through the mind of the individual staring down the ultimate crisis? How do they react, and what survivalist instincts kick in? A similar exercise can be applied to U.S. businesses and technology companies and their employees over the next few quarters. As the market worsens, do you and your business have the fortitude to weather the storm? If some of these other economic indicators are accurate and a strong economy helps a volatile market rebound, will your business still be innovating, pushing ahead with its IT projects, entering new and profitable markets, and creating more valuable customer relationships? Or will some of those initiatives have capsized? Indeed, will some of the weaker companies with even dimmer insight into true economic conditions sink to the bottom altogether? Because it's so important for business technology executives to keep an eye on economic conditions, InformationWeek will be enhancing its coverage of economic news and issues across the brand--in the magazine, online, in our research, and at our events. The intent, of course, is to inform, but also to enlighten so that readers can form their own opinions about what impact the economy will have on business and can make more educated decisions about technology projects. We also invite you to let us know what types of economic or market indicators and information you think would help you in your job. Brian Gillooly is editor-in-chief of InformationWeek Events. He can be reached at bgillool@cmp.com. DAK