On Friday, July 15, 2016 the Wall Street Journal had an article titled, “Surprise: The Economy Is Looking Much Better; Citigroups U.S. Economic Surprise Index is at its highest level since January 2015.”
Here’s an excerpt from the article:
Citi’s Surprise Index measures economic data relative to expectations. If reports are surprising to the upside, that means indicators such as employment, housing and inflation, are coming in higher than expected and the index is rising. A declining index suggests more data points are falling short.
Citi’s index had been in negative territory for much of the past 18 months. Perhaps not coincidentally, U.S. stocks were stuck in a fairly narrow trading range for much of that time.
Now compare this to all the economic doomsayers (definitely not in Seattle or the Bay Area). This index is at its highest point in 1.5 years, which surprises me because we’re in an election year, a very contentious election year.
For those of us in Seattle the Surprise Index results are not a surprise. My clients and other business owners have had a hard time finding good people. Heck, even in the small town where our cabin is there are “help wanted” signs everywhere and a friend told me “it’s hard to find good employees around here.”
So how does that tie into your business or mine? In mine optimism means more people willing to take the leap of faith to buy a company or to sell their company. Yes, buyers worry if they think they are buying at a peak, but an index like this should alleviate some of their fears (nothing will alleviate every fear a buyer has, which is the way it should be, healthy skepticism).
Sellers always wonder if they’re selling too soon, but should realize if the future economy is strong there is less chance their buyer will have problems. My advice to them is do what it takes to get your business ready for sale so you don’t miss the rising tide (see my book, If They Can Sell Pet Rocks Why Canâ€™t You Sell Your Business (For What You Want)?).
“There are very few monsters who warrant the fear we have of them.” Andre Gide