Finding a floor
Things aren’t getting worse. And that is definitely something in the context of this recession. As statements go, it isn’t in the same league as “things are much better”, of course. But our team has had glimmers of firmness since April, and they appear to be holding.
With about 20 portfolio companies, we have the benefit of seeing a range of data in a variety of sectors of the economy. Back in April, we could see that for February, March and much of April, the scariness of January hadn’t continued. Business and commerce were continuing, and customers were still buying product.
With the benefit of our Q2 review now behind us, one can definitely see a trend. DSOs haven’t increased, revenues have been flat at worst (rewarding those who were already EBITDA-positive), supplier credit has been consistent, banks are behaving rationally (in most cases).
All signs of a more normal economy, at least in our mini ecosystem.
But, is this a “V”, “U” or “W” type recovery?
MRM
I’m thinking more of a "checkmark" shaped downturn – a very sharp downturn and an extended recovery.
Well, according to Sheryl King, chief economist and strategist at Merrill Lynch Canada, this is a V-shaped recovery – her estimates indicate that the Canadian economy could grow 10% in the fourth quarter and 7.5% in the first three months of 2010.
My view? It’s more of a distorted U-shaped recovery (think of the U being drawn by a 3 year old – squiggly, but still a U nonetheless). There’s definitely an upward trend now – what with all the optimism and better-than-expected earnings – but there are still pockets of the economy shafted by the lingering ‘recessionary sentiment.’ Over the next few months, I think we’ll see more ups than downs, but the downs will still be present; ultimately preventing this from being a full on V-shaped recovery.
Just my two cents.
More like a “W”
With the second downturn starting this fall/winter and the true recovery starting in about 3-5 years (IF WE’RE LUCKY.)
Of course, I’m no expert…I just play one on TV…
A lot of folks are singing, just none of them are fat ladies!
Cheers. 🙂