What goes up, must come down. Hard. Wall Street’s current ride may be grabbing headlines and padding 401k accounts, for now, but solution providers aren’t buying into the hype just yet. The Dow Jones Industrial Average surpassed the unthinkable 15,000 mark this past week causing many to speculate that the national, and even world, economy is recovering. But smart money is expecting a major correction soon.
While I hate to throw cold water on optimism, solutions providers and service providers I speak with aren’t getting all that excited just yet. And for good reason. These folks are not just technology providers, but many are also small business owners and are on the front lines of where the economy meets the road. They see true consumer and business sentiment and what they currently see is still a troublesome business climate, no matter how high stocks are inflated.
The unemployment rate is remaining over the 7.5 percent mark, and that doesn’t even include those folks who stopped looking for regular work. The national debt is at $16 trillion and climbing. Consumer confidence is still waning and either slightly up or down depending on the month with no real positive pattern. And the economy isn’t growing at a fast enough pace to make any meaningful impact. In turn, inflation is creeping up with food and utility prices rising and the value of the U.S. dollar diminishing as Washington keeps printing more money in an effort to float more currency in the market. All of these indicators are a truer sign of the health (or lack there of) of the economy than rising stock prices.
Solutions Providers and service providers see corporations delaying or cutting back their overall IT spend. Sure, critical growth areas such as security, mobility, virtualization and cloud computing will always find funding but larger deployments are being postponed. And as small business owners, they are already seeing the impact of the inflation, regulation and uncertainty is having on their current operations and ability to plan.
They are all confused and concerned about higher healthcare costs as a result of the Affordable Healthcare Act (ObamaCare), higher tax rates and even more regulation coming down the pike. This is causing them to sit on their cash, not invest in new capital expenditures and delay hiring, just like any other small business. These concerns are real and impacting their ability to invest and grow. They, like many of their customers, are sitting on the sidelines and delaying business decisions until they can figure out what all this means to their future.
So don’t be fooled by the recent surge in stock prices. The foundation of our economy is still shaking and smart SPs know it and are planning accordingly.
Knock em Alive!