Economist Retains Optimism Amid Economic Crisis

While it may seem difficult to find even a single sliver of good news amid the global economic crisis, one economist actually has identified three silver linings.

“For starters, the threat of inflation that dominated discussions earlier this year has faded from consideration by most,” says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturer’s Association.

In the new FMA economic update newsletter “Fabrinomics,” Dr. Kuehl reports that the price of oil has slipped by more than $60 in three months, while steel and copper prices are also sagging. Many other commodities have slipped as well, which can be good for business. “Of course, lower input costs don’t help much if demand for the finished product is off, but it doesn’t hurt to get some cost relief when the recovery begins to surface,” Dr. Kuehl says.

The second silver lining, Dr. Kuehl notes, is the kind of thing that gives economists a bad name. The labor pool is always more shallow than preferred, he explains, and when the jobless rate is low there are less quality employees to choose from. Rising unemployment puts talented people on the market, allowing smaller companies to have access to employees that only larger companies could recruit previously.

“There are also more grateful employees in a downturn, and this can lead to productivity gains,” Dr. Kuehl says. “In fact, the level of productivity in the U.S. has risen in the past few months. It is not that business wants to see economic stress visited on their employees and others, but when times are too good for too long, the culture of work changes, and not always in a good way.”

The third positive will develop “as banks lick their wounds and figure out how to get reengaged,” Dr. Kuehl says. “The winners are going to be the traditional banks that didn’t risk that much in the weird credit markets. The were and are ‘relationship banks,’ and will become more engaged in that kind of old-fashioned business. Companies with good relationships with their banks are going to be in a good position if that bank is one of those that managed to stay intact.”

For more information from the Fabricators & Manufacturers Association (FMA), visit www.fmanet.org.