This is for anyone interested in what I'm seeing ahead for the economy here based on a business I have and another in which I have a partner. In my solely owned business I sometimes extend credit. The clientele with which I deal on credit is generally what is known as "'C' & 'D' credit" clientele. Essentially, these are high risk borrowers with more than a couple 'bumps' in their credit history. In essence, people with whom conventional lenders won't do business whatsoever. Again, generally speaking, these people fall into the "last hired, first fired" category.

In recent weeks and months (yes, before 9-11) I've seen collections slow dramatically with overdue receivables increasing accordingly. While I know there can be as many reasons for this as there are accounts, I'm seeing a large percentage of delinquencies reporting layoffs and reductions in hours ranging from elimination of mandatory overtime in some cases to reduction of hours from 40 to as few as 16 in one instance in order to avoid layoffs.

In another venture I have with a partner I'm seeing more indications of a major slowdown. We lease semi-tractors to owner-operators there and are seeing it becoming tougher and tougher for these guys to log the miles they need in order to be profitable. The reason is simple. There isn't as much freight being shipped.

That translates into not as much raw material and not as many parts going to manufacturers, not as much new merchandise coming out of their plants, not as much being sold or bought and not as much commerce occurring. There's another part of this, too. Without the freight we're seeing a number of very good owner-operators going out of business.

The incredible number of repossessions of class eight trucks has had a number of effects. Some lenders have completely closed their truck finance operations. In fact, almost all non-manufacturer owned lenders are gone now. As a result of that, independent (non-franchised) dealers are in a real bind in that, even if they find a buyer, they cannot get him financing. More businesses and jobs gone.

Another effect of these things is that the influx of used, repossessed trucks combined with the lack of financing for them has forced prices down dramatically. So much so, in fact, that a 94-96 semi tractor loaded with options is roughly the same money as the same year SUV. Most of the large, well known, publicly owned carriers are listing their equipment as an asset on their financial balance sheets. these asset valuations are based on depreciation schedules established before the market collapse.

I've done a little research into this and, based on my knowledge of today's values, have determined some of these companies are already technically bankrupt. At today's market value of their largest asset (their fleets) some of these companies actually have a negative value today. They are existing solely on cash flow which is already diminishing. Yet more jobs at risk.

With all of that having been said, I'll add I could be wrong on my predictions here. I'd like to be. I just wanted to share what I'm seeing from my little corner of the world here.

-- Gary in Indiana (gk6854@aol.com), September 30, 2001

Answers

Sorry to say that from my corner of the world things look equally dismal. Pre 9-11 (August) most of the major production companies that I do freelance work for laid off significant percentages of their full time staffs. I also rent equipment to a couple of them and both of them owe me money from as long ago as last December, so I know their cash flow hasn't been too healthy. Most of us did not work all summer, which is not too unusual since summers are usually slow in our business, but everyone was pacing themselves financially expecting a busy September. Well, one of the companies lost $480,000 worth of work in three days after the WTC attack. I wonder, if they were in trouble before, how long can they hold out now? I see several of them potentially going out of business before the end of the year if things don't pick up soon.

-- Elizabeth (ekfla@aol.com), September 30, 2001.

We actually are having a boon in both my husbands "Handyman Services" company and me :) Lonesome Doe Nubains, very much like Y2K. We also went to the mall (a place you rarely see me) it was packed! I really don't see any difference pre 9-11-01 to now, just like I previously predicted :) American's have very short attention spans. Vicki

-- Vicki McGaugh TX (vickilonesomedoe@hotmail.com), September 30, 2001.

Gary,

I hate to hear the news that you are reporting. However, I own a printing and promotional items business, and am happy to report that business sales are UP dramatically in the past month or two. I did have a very bad February, April and May.

-- clovis (clovis97@Yahoo.com), September 30, 2001.

I'd give a lot of credence to Gary's report as a *leading* economic indicator, meaning that what he's seeing now the rest of us will see in a month or two. An acquaintance who is an active stock market trader follows the number of rail-car loadings on a weekly basis as his hint to the economy's future, and he is truly hunkering down right now. He says the trends are worse than he has ever seen, and he's been in the business a long time.

-- Cash (Cash@andcarry.com), October 01, 2001.

I remember telling my wife about three months back as we were watching a freight train pass that at that time the piggy back loads appeared to be about double what we normally saw. Just this weekend I watched four freights rolling the track completely made up of OTR piggy back. The last I time I recalled that heavy a concentration of rail shipment of OTR freight was in the 70s. Two long haul drivers I know now are only doing local haulings and coming home every night.

-- Jay Blair in N. AL (jayblair678@yahoo.com), October 01, 2001.

Vicki, I have read that in times of economic instability that remodeling and do-it-yourself kinds of projects increase. That is when most people fix-up instead of sell a house. Sounds like it would be good for your business and a lumberyard/hardware store too. I imagine mechanics see an increase as less new cars are sold.

-- Anne (HealthyTouch101@wildmail.com), October 01, 2001.

I've also seen several indicators.

My sister and her husband have a flower shop they bought about a year ago. General rule of thumb is you lose money the first year, break even the second and start making some the third year. Sept. 11th was right at the one to two year point and a lot of their business just disappeared. They are barely holding on by being supported by funeral arrangements (fortunately for them a lot of people die in Florida). Prom business was down and most of their party and wedding arrangements simply cancelled.

A cousin in Chillocothe, OH and her husband own a roller skating rink. On a normal Saturday night they can expect about 200 skaters. Two Saturday's ago they had 20. That barely pays for utilities and hired help. Geary commented the business is tanking two years away from their projected retirement date. And, it is quite likely they may not find a buyer for the rink then due to a very low return on investment. Geary also commented the entertainment industry in general is a pretty good indicator as people start to forgo it.

The airlines were in trouble even before Sept. 11th. Notice on the four planes which were hijacked, all were wide-bodies but carried less than one-half a load of passengers.

Even before Sept. 11th, just about every day the newspaper was reporting plant closings or significant layoffs.

The local Farmers' Co-op has laid off two people in their vehicle repair area. The manager commented to me sales of fertilizer were way down this year.

It sure looks like we are already in a recession.

-- Ken S. in WC TN (scharabo@aol.com), October 01, 2001.

Construction spending fell 1% in August, the largest decline in 8 years. The Index of Industrial Activity also fell in September. Consumer spending increased 0.2% in August pre-terrorist attack. They expect spending to decrease precipitously from 9-11-01 on.

-- Anne (HealthyTouch101@wildmail.com), October 01, 2001.

I work in the bar scene, and I can tell you what I see - a lot of customers drinking (and more all nighters as opposed to a few beers and go out to dinner), but not tipping. They want to go out, escapism, but have little money to spare. Some of our dancers are going home with essentially only enough money to pay the sitter, and buy enough gas to come back the next night. When exotic dancers could make more in an entry level customer service job, you know things suck.

-- Soni (thomkilroy@hotmail.com), October 01, 2001.

The long haul trucking industry has really dropped off, at least the good paying freight any way, folks are really cutting back on what they spend, at least in industry anyway, we haul mostly heavy machinery and oversize eqipment and the like, not van freight, so our type of freight is a good indicator of the industrial side of the economy. For us, the economy has been in the toilet for the past two or three years.

-- Annie Miller in SE OH (annie@1st.net), October 01, 2001.

Anybody work for a greeting card company, such as Hallmark? I've heard that when times get tough that their business increases. When people can't afford a birthday present,etc. they start sending cards instead.

-- r.h. in okla. (rhays@sstelco.com), October 01, 2001.

Hey Ken S., something you might want to mention to your cousin owning the skating rink . . . We used to have a lot of those skating rinks, but business dropped off pretty dramatically. Most of those have gone under and became bingo halls. If bingo is popular in her area, maybe this might be the time to make some inquiries . . . bingo is cheap fun.

-- j.r. guerra (jrguerra@boultinghousesimpson.com), October 02, 2001.

j.r. I'll mention it to them. Heck, they had installed a $10,000 sound system so it would make announcing nice. I have seen bingo halls in Ohio, but don't know if they were private concerns. Here, in TN, bingo, even in church basements, is illegal as it is considered to be gambling (as are ducky races). Remember TN - "Heart of the Bible Belt"? Humphreys Country doesn't have licquor by the drink or even bottle clubs.

Another industry which is doing great is religious publishing houses. Sales of Bibles are up 20-30% in some areas. They can't keep books on understanding the Islamic faith on the shelves.

-- Ken S. in WC TN (scharabo@aol.com), October 02, 2001.

Given the price of Hallmark and other paper greeting cards, I would expect them to be having a slow-down, too. It's a lot less expensive to send an e-card, or even print one off of your computer and mail it, than to pay three dollars for a commercial card (plus postage). And the big hatcheries are almost certain to go down the tubes next year -- hope all of you that raise chickens either have a local source for chicks, or your own roosters so you can raise your own. (Considering that PETA is a terrorist organization, it really amazes me that the government is willing to give in to them!)

-- Kathleen Sanderson (stonycft@worldpath.net), October 02, 2001.

Ken,

Depending on the size, location and available parking, they might want to look into converting to a reception hall. Around here reception halls are all booked on weekends for months in advance. It'a business that's always kind of intrigued me (as has self- storage, but that's another issue). It's got to be far fewer hours than running a rink and, in deference to an earlier post, they can still do bingo a night or two during the week. ;o) I hope this helps.

-- Gary in Indiana (gk6854@aol.com), October 02, 2001.

We are also seeing a major boom in my husband's handyman services! He could be working around the clock seven days a week if he could hold out! This was occuring before the events of Sept. 11th and continues now. It may be that people want to fix what they have instead of buying....But he's doing electrical wiring, installing light fixtures, installing new doors, all kinds of stuff.

-- Suzy in Bama (slgt@yahoo.com), October 02, 2001.

One bit of info seldom reported about the hijacked planes: it is true that they all had reletively few passengers on board, but the main reason for that is that many, many fake reservations were made for those very flights. It is assumed that the terrorists wanted fewer passengers to control. Makes sense.

I also heard that when the stock exchange opened the following Monday, both Budweiser and Phillip Morris jumped in price.

-- Sandy in MN (onestonefarm@hotmail.com), October 03, 2001.

Sandy, according to the FAA there were no more missed reservations for those flights than normal. It's believed this very well planned assault was set for Tuesday AM for the simple reason that traditionally Tuesday AM is the lowest occupancy time for those flights. It makes sense that if you intended to take over an plane with passengers, you'd want as few passengers to subdue as possible.

As to the stock price rise of BUD and MO, those companies are now far more food companies than a brewer and a cigarette maker. Food stocks in a time of crisis are what are known as "defensive plays" in the market. While not known as strong performers in good times, these are normally good plays in a declining or unstable market. People have to eat in good times and in bad. I hope this helps.

-- Gary in Indiana (gk6854@aol.com), October 03, 2001.