Call me Cassandra. Or call me the boy who said the king has no clothes. We are now in a recession, there is no doubt. See below for "Here's how to cope."
Consider the evidence:
- Consumer spending is down, according to the New York Times. (See "Americans Cut Back Sharply on Spending.") This hasn't happened since 1991. Retail sales for December -- the holiday shopping seasion -- were down .4%. “This is the real deal — consumers are slowing down across the spectrum,” said David Schick, a retail analyst at Stifel Nicolaus. Consumer spending accounts for 70% of the economy.
- The unemployment rate rose to 5.0 percent in December. (See "Employment Situation Summary" from the Bureau of National Labor Statistics.) The number of unemployed persons increased by 474,000 to 7.7 million.
Nobody likes a party pooper, but I predicted this last August (see Get Ready for the Coming Recession). (The nay-sayers love to say I'm referring to my own business, which is not the case. Trust me, I'm busier than ever.) Consider the additional evidence:>
New home sales posted the biggest drop on record in 2007. Weak December sales left full-year new home sales at 774,000, down 26 percent from the 1.05 million sales in 2006. That was the biggest drop since the government started tracking new home sales in 1963, surpassing the 23 percent decline posted in 1980.
Housing starts are down 24% from a year ago to the slowest pace in 16 years.. The median sales price of existing single-family homes has been falling all year, according to the National Association of Realtors. A person's home is the largest single asset and the source of a sense of prosperity for most Americans.
- The value of the dollar is near an all-time low with the Euro worth $1.46. The dollar is worth the same as the Canadian Loonie currency.
- The price of oil spiked at $100 per barrel on January 2 and has settled at an exorbitant $92 per barrel.
The US trade deficit widened sharply by 9.3% in November to a larger-than-expected $63.1 billion. The trade deficit has widened to its highest level in more than a year. >
- The "credit crunch" means that investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, thereby driving up the price of debt products for borrowers. Citigroup, the nation's biggest bank, announced a stunning $10 billion fourth-quarter loss. The Kuwait Investment Authority -- a foreign country -- is expected to bail out Merrill Lynch with a $4 billion investment.
- The cost of the war in Iraq over the past five years is now approaching a cumulative $500 billion, or about $100 billion per year on average. Our children will be paying for this for their entire lifetimes.
Here's how to cope.
- Lawyers must get business development training. Rainmakers are not born, they are trained. Marketing is not taught in law school, and today's rainmakers got training and attended programs on business development. Getting clients is not an innate talent, but it is a learnable set of skills.
- Smart lawyers will make extra efforts to stay close to their current clients -- setting up regular off-the-clock update meetings and visits to client offices -- so that they don't lose current revenue.
- Lawyers will develop personal business development plans. The time to prospect for new clients is when you have enough work -- right now. If you wait to originate new work until your revenues start to go down, it's almost too late. At that point your competition will be slashing rates and starting to market against you. Don't wait until the recession is officially declared.