Global Corporate Xpansion

had 10 or 11 classic economically defined recessions in the last half century.

This is nothing like any of the above. This is different. Any other time the economy slowed down, we went into recession, and we came out of it with some momentum.

This prolonged period, we are here now already nine moths, staring at the chance of another six months to 12 months of more of the same. We have never had a long period like this.

We have never had credit markets be so crazy. And modern economy depends on credit the same way you and I depend on blood supply.

We have never had credit markets freeze up. Yes, we have lost money because of what is going on in housing elsewhere. Estimates run as high as a trillion-and-a-half dollars. That is a lot of money. But, look, back in 2000 in the tech wreck, the amount of wealth that was destroyed was $6 trillion. Credit markets didn’t freeze up. One question is: how come now with losses a fraction of what we had back than that these losses are freezing up the credit market?

And that is only one of the ways in which what we are going through is a unique set of circumstances. We have never been here before. A piece of that also suggests the way out of this will be in corporate boardrooms, and over kitchen tables. It will not be in Washington, D.C., not going to be in the statehouse, it will not even be in city hall.

And, at this stage of the game, already nine months in, the only thing we do know is that we are not finished.

Optimists thought we might come out of this by now. Obviously they were wrong. The pessimists said we would recover in the second half of 2009.

GCX: What does the Conference Board’s latest Composite Index of Leading Economic Indicators say in regard to the overall economy?

Goldstein: The numbers we have through May were suggesting that we are not finished. They were suggesting that it is not getting worse. But they were hardly suggesting that we were on the verge, rebate checks or no, of pulling out of this thing.

We have had job declines for six months, and we will see them decline for another six months. The monthly decrease may not get any steeper but we are in this, at least in terms of job market losses, for at least the next six months.

If we are really lucky, we might start to see it improve by New Year’s Eve. If not, by St. Patrick’s Day or even July 4.

GCX: How is the economy of the Western United States faring?

Goldstein: Let’s start west of the Mississippi River, in that part of the country that we call the west, north central part, was not in bad shape before the flooding. This brings up a good point. This economy is too slow, whether we are talking about this part of the country or the country as a whole.

There is no margin to absorb an economic shock. But what happened? The Mississippi River overflowed again. Too much rain, too much runoff. This washed out part of the crop so that wheat and corn prices, which were already at historical highs, are going higher still.

So those that didn’t get swamped, at least they can benefit from higher prices. Right now we can see that the cost of livestock feed is sky high. What do you think this means for meat prices come October or November? Don’t be surprised if the price of the Thanksgiving turkey is eye popping in November.

You start from Missouri to the Dakotas, a weak economy, further weakened by the flooding, and they are only starting to dry out — dry the economy out not dry the fields out.

If you move into the complex of Utah, Wyoming, Idaho and Montana, there is an energy component to that economy. Both from Wyoming, a little less so in Idaho and Montana, as well as what they are driving north of the border, from Alberta, Canada’s oil sand project. So they are getting a little of the benefit from that project, at least for the moment.

The Pacific Northwest is in trouble and it has been. In regard to manufacturing, they are lucky in one sense that some of the power is hydropower and so it helps that those prices aren’t following the curve along with natural gas, coal and oil.

It is not as bad in Oregon and Washington, as it is in Michigan and Ohio, but it is not much better.

And overall, except for the damage from the flooding, the region as a whole is not doing that bad. The good news is that even where it is bad, it is not getting much worse. The problem for that part of the world, and for the economy as a whole, is that it will not get better for a while.

And frustration is starting to set in. We have been here for nine months, looking at another six months. We can handle this, if only we could handle this looking in the rear view mirror.

When looking at confidence measures, especially when looking at expectations, we have never measured lower expectations, for the region or for the country.

It feels like everything is falling in. It is the housing markets, the financial markets, the energy markets. And there is no end in sight. So that is leading to frustration both on the part of consumers and businesses.