Dinner with an American Friend

At the risk of sounding like a stuck record (now there’s an analogy that will pass the iPod generation by) I feel compelled to return to a favourite current hobby horse, namely the divergence between economic reality, particularly in the manufacturing sector, and economic reporting.

I had the good fortune of being able to catch up with the President of one of my clients’ North American operations at a dinner on Tuesday evening in Hannover. He was in Europe to promote his new valve body production machine at a German trade show and was in good form covering a range of topics.

We started with business performance. “How are things at the moment?” I asked.

“Great,” he replied, “we’ve taken on 200 extra employees this year already.”

Noting the slightly sceptical look on my face he went on: “I know, it’s like there’s a parallel universe between what is actually going on and what the media are saying!”

Well yes quite, I’ve certainly read enough in the Washington Post or New York Times to suggest that the American economy is shrinking at an alarming rate. “Oh I tell my guys not to read any of that stuff. You wouldn’t get out of bed of a morning if you took them seriously.”

He offered as an example, recent reporting of the American version of our Purchasing Manager’s Index. “The Index had fallen from 65 to 55 and it was reported as if the world had fallen in, but 55 is still growth!”

However, my American friend did concede that wider economic problems outside of manufacturing could make life difficult for Obama in 2012. “He’s going to find it awfully difficult to get re-elected because of problems in the wider economy. The big advantage he has is that the Republicans can’t find anyone to rival his political charisma that is also electable. If they do find someone then he’s in real trouble.”