There are bunches and bunches of quantitative measures used, and abused, to gauge the health of the Silicon Valley economy.
Tech stock prices, local real estate sales prices and volume, mortgage rates, local employment opportunities, latest retail
prices for electronic gadgets, etc. are all readily available. There is even a monthly table showing a broad array of Santa Clara County's local statistics.
Similar to practices in Washington and on Wall Street, Silicon Valley bulls and bears selectively employ, or ignore, numbers
to make the case for their chosen view of the local economy. Our long-standing insistence on filtering out paid "optimists"
helps, but there is still room for the old adage, "Figures don't lie, but liars can figure."
A couple weeks ago, local pundits raised their cheerleading profile by reprising the "traffic is up," therefore the economy
must be "better" mantra. Unfortunately, there are no real-time (or even near-time) quantitative measures of local traffic.
Nobody can really prove, or dis-prove, traffic is "up." A shift in road construction, or in time-of-day of the traffic tie-ups,
or even the angle of the sun hitting US101 during commute hours can be used to explain away, but not entirely dismiss, recent
front-page "news" that traffic is "worse."
As supporting documentation, the cheerleaders claim our local population is back up to 2000 levels. Their logic was a low
employment rate (5.5% as of August, 2004) on top of this population rebound "proves" the Silicon Valley economy is roaring
back. Unfortunately, I missed hearing where he got the population figures. I also missed where he explained why apartment,
commercial real estate and rental home vacancy rates are all running much higher than in 2000 while rental/lease prices are
significantly lower. I suppose the "traffic" and "population" anecdotes could both be true is if all these new workers are
living in, and working from, their cars...
As counter-point, CBS Marketwatch reports, "Long-term unemployment has been particularly insidious during this business
cycle. In August, 20.7 percent of the 8 million workers classified as unemployed had been out of work longer than six months.
The average duration of unemployment remained high at 19 weeks."
Even with 40% of the unemployed running out of benefits while still looking for work, or giving up, the NASDAQ is up nearly
50% from its October, 2002 lows. I submit, at Silicon Valley's high cost of living, unemployed people are rapidly forced to
move elsewhere, hence our low headline unemployment rate.
You and I both could site dozens of examples of the same or similar data being cast in different lights, depending on your
current situation and motivation. Rather than continue to pine for hard numbers, today I am going to stoop to the cheerleaders'
level.
Actually, I've developed my own system. I juist ask people, "So how's business?" Overlooking my grammatical imperfection,
the results are often interesting:
The house across the street from us in Palo Alto sold in about a week. My "So how's business?" question posed to the real
estate agent learned they saw a drop-off in August & September but buyer's were now back in the market. OK, even though
she is clearly an "optimist," it appears real estate still sells briskly in the Palo Alto area. There seems to still be some willing buyers.
With real estate sales strong, you would think moving companies are slammed. Back in late June, one major moving company
told us they were "sold out" for July. More recently, they were only too happy to compete for our business. Each week that
went by, we would get a lower quote. As our range of move dates narrowed, they only needed a few days' notice. Our final price
when the move was completed came in another ~$200 below the estimate.
Speaking to the guys physically doing the move, and getting paid by the hour, the supervisor explained they had been working
72 hours a week and were still unable to keep up just a few months ago. Lately it has been a struggle just to get in 40 hours
a week.
We then went shopping for a new desk at a local office supply store. In response to "So how's business?", the warehouse
guy said, "really slow." He explained their back-to-school period was over but it had been slow. Even slower than 2003. (Wasn't
2003's back-to-school rush already considered "slow"?) He told me their current activity level makes work "boring."
The CableTV technician said his activity level has really slowed down. This is particularly insightful after we needed
intervention by a VP of Customer Service and three visits, the last one a team of two technicians on-site for nearly two hours,
to detect and repair where a previous tenant cut the cable and hidden the splitter in the crawl space. The last technicians
commented that with all the re-built homes in Silicon Valley, such complex activations are not unusual. But even with such
make-work projects, the cable company's technicians feel business is slow.
We also had "fun" with the local phone monopoly. (OK, it wasn't fun and they don't technically have a monopoly, but we've
gone qualitative.) After 36 hours of no service, I finally got a supervisor out to the property ~5:00pm Saturday. In the course
of telling me how screwed up the wiring in our house is/was, I asked him "So how's business?" He says 2004 is slower than
2003 at this time of year. He volunteered that 2003 was slower than 2002. He also commented they expected another round of
layoffs to be announced soon since nobody was willing to take a buy-out being offered by the company. (Both he and the technician
accompanying him have been with the company over 25 years. They were confident such seniority immunizes them from these layoffs.)
More or less finished with our move, I started catching up on the stuff that falls off the radar when you take up a second
full-time job. First up was car maintenance, especially tires and alignment which are constantly pounded on these glorious
California roads. I called to schedule a rotate, balance and alignment, expecting to have to pick a future date when they
could get my car onto their equipment. Instead, the manager said things were so slow (at 12Noon on a Thursday) that, "I have
the guys cleaning up" . I ran the car in and got this ("free") work done over lunch.
I was also due for an oil change and a local mechanic shop offered to do the job for less than half the dealer's price
plus he could detail it in-house. (I will write more about why this is relevant in a future chapter.) He said business was
"steady" but since it was already 3:30pm, he could accommodate me any day, any time but tomorrow.
So there you have it: Real estate is still strong. Auto maintenance is steady. Moving companies, office supplies, the cable
company, the phone company and local tire store are all slow. How long this divergence can last is anybody's guess. How it
will end is a little easier to imagine…
I don't claim this survey is scientific or comprehensive. The beauty of it is that everyone can do their own. Such a survey
will, by definition, precisely match ones needs in the current economy. Next week and next month you can take a different
survey based on what you need or are interested in at that time.
