It is time to speak the truth. In the words of Hans Christian Andersen, “the emperor has no clothes.” We are in the midst of a semiconductor “double-dip” recession, whether we want to admit it or not.
How many of your colleagues are whispering at the coffee station about how “slow” business is, how few emails they received, or how little backlog they have going into the fourth quarter? It is time to look the beast in the eye and admit where we stand. Only then can we take action to adapt to the situation at hand.
The Labor Department reported Friday that employers added 103,000 jobs in September — on the surface, a positive indicator after very meager job gains in August. However, 45,000 of these “gains” were in fact a statistical adjustment reflecting striking Verizon workers returning to their jobs. This leaves us with essentially “no change” in job creation. Economists estimate that the nation needs to add 150,000 jobs each month just to keep up with population growth. You do the math; we are falling behind.
Fewer jobs means lower consumer spending, and two thirds of the US economy is driven by consumer spending. It is a vicious circle — bad economic news, layoffs, falling consumer confidence, and less consumer spending, resulting in more bad economic news and more layoffs.
I'm an optimist, but I'm not a fool. The electronics industry is dependent on consumer spending. In July, Intel was estimating quarterly revenue in the range of $13.5 billion to $14.5 billion. With Intel's third-quarter results now out, with revenue at $12.8 billion, where are the bullish analysts of just 90 days ago? Intel's forecast for the next quarter is flat at best — revenue of $12.8 billion to $13.3 billion. Whether listening to iSuppli, Gartner, or SIA, the message is the same. Inventories are up, and demand is down. It does not take a PhD to calculate what is coming.
In the 1992 presidential campaign, the Bill Clinton camp focused the public away from international issues by chiming, “It's the economy, stupid”. Unemployment had jumped from 5.3 percent in 1989 to 7.5 percent in 1992. People were angry and responded to his message.
In 2007, unemployment stood at 4.6 percent. Today, it is over 9 percent. Wake up, people. It is 1992 again.