Numbers have told the story of the global recession, with monthly, quarterly and annual indicators characterizing all of the economy's ebbs and flows. Analysts, regulators and academics rely on these figures to make predictions and policy, but for financial professionals in the trenches, the real-world worth of numbers and growth percentages is notably subdued. In NACM's most recent monthly survey, respondents noted that economic indicators do have an effect on their company's policies but that it's a muted one at best.
When asked "How much do economic indicators and statistics influence your company's policies and procedures?," the largest percentage of participants (47%) answered "somewhat." The next most popular answer, garnering 28% of responses, was "not very much," followed by "very much" with 16% of responses. Six percent or participants said "not at all" and only 3% didn't know how much these indicators affected their companies.
Certain policies were more susceptible to change based on economic figures than other policies, most notably salaries. "We were just told that our company has been put on a salary freeze for 2009 and possibly for 2010 due to the economic crisis," said one respondent. Others noted that economic indicators play a role but that it's only one part of their company's considerations. "Economic indicators are used as one of the factors we consider when determining acceptable risk levels," said one participant. "They are used as a gauge to indicate how we think risk levels will be impacted by our customers' financial condition and what direction their markets are expected to take."
Some respondents noted that the breadth of some popular economic indicators makes them less useful and that more specific figures have a greater sway in their company's behavior. "The indicators that we use are not the general newsworthy reports, but those tied to maritime shipping and cost statistics for international shipping. These indicators will impact where we need to watch expenses and gear up to take care of our shippers," said one participant. "We follow government economic indicators and stats but our focus is with our industry's indicators and stats," said another. Opinions on larger, general economic indicators were varied though, with some hailing them as an invaluable resource ("No business no matter its size, scope, industry can truly succeed without following economic trends, developments, and statistics.") and others deriding them as an oversimplified and often sensational account of what's really happening ("If you let yourself be guided by the media's opinion of the economy you will be out of business in no time."). These respondents often noted that they relied on other sources for their company's strategies. "My marketplace and discussions with clients are a much better indicator," said one respondent.
NACM's September survey deals with how you communicate with your customers and will be live on NACM's website (www.nacm.org) shortly.
Jacob Barron, NACM staff writer