I am in the same camp as
Federal Reserve Chairman Ben Bernanke. I know that the economic recovery is in full swing, because I've confirmed it with Mike, a deli owner around the corner from my office, John, a neighborhood restaurateur, Ammar, my cigar shop proprietor, and Gus, my family's shoe repairman.
These four men and the nation's 6 million other small-business owners are on the economy's front line and get a firsthand reading of consumer spending and sentiment.
My first confirmation of the economy's rebound came as I was waiting for my chicken salad
sandwich at lunchtime, and Mike wandered over to chat. “I believe things are getting better,” he said. “I can tell from what my customers are buying.”
Mike explained that sales of expensive vitamin water have picked up in the last few months, as have sales of bottled water.
“I'm glad customers decided to stop using the water fountain at work to save some money,” he said.
Mike also has noticed an increase in companies' ordering breakfast and lunch for staff meetings. “People have to eat,” he said. “But it doesn't mean their employers have to pay for it. That has changed since last year.”
Since Mike's economic observations were intriguing, I decided to test them that evening by ordering Chinese food for dinner, much to delight of my wife and daughter, who didn't mind being part of a scientific experiment. When I picked up the food, I asked John, the restaurant owner, about the recovery.
“Over the last three or four months, I have definitely seen more people ordering takeout,” he said. “And it's not just Friday or Saturday nights, which is great for me.”
While John noted that his regular customers have been ordering less-expensive meals, on average, his business is now busier than it was a year ago.
“About 18 months ago, I had to let one of my three delivery kids go. Now I'm back to three,” John said.
I could feel a positive trend unfolding, so I stopped by my favorite cigar shop.
Ammar was at the counter, as usual. When I asked about the economy, he said that he, too, has seen a change in his customers' buying habits.
“The men are buying more expensive cigars than they did a year or so ago,” he said. Instead of buying a $6 to $10 cigar, they now are buying cigars in the $12 to $15 range, with many crossing the $20 plateau.
I suggested to Ammar that in tough times, no one likes to see their hard-earned money go up in the smoke. Without a hint of a smile he suggested I buy my regular Padron or La Gloria Cubana and be on my way.
My last stop was the shoe repair store a few blocks from my home. What was Gus seeing?
Unfortunately for him, the rebound has meant a drop in his business. Lately, customers have been asking only for small repairs. A year ago, they were having “big work” done on their shoes.
“They figured it was better to spend a few dollars to put new soles and heels on the old shoes than to buy new ones,” he said.
“Two years ago, when I repaired shoes and boots, I had more customers asking me to waterproof them for the winter than ever before. The little bit of extra care on the boots saved them from buying new ones.”
Going from the ground level, literally, to the big picture, it's clear the economy is starting to heal. A recent
Federal Reserve report found conditions improving in 11 of the 12 central bank districts across the country. For the fourth month in a row, the government has reported that retail sales are up, a real sign of improving consumer confidence.
Meanwhile, the leading economic index, a key to tracking the U.S. economy, increased by a higher-than-expected 1.4% in March, following a revised 0.4% gain in February and a 0.6% rise in January. Most analysts had expected a 1.1% rise in March, capping a year of increases and indicating a firming of the recovery from a deep
recession.
Mr. Bernanke has said publicly that all the economic indicators are positive. The market is up, businesses are making more money, consumers are spending more, and jobs are being created.
Since all seems well from the Federal Reserve's 30,000-foot perspective, I would like to believe Ammar's view from the ground: “Perhaps happy days are here again.”
Jim Pavia is the editor of InvestmentNews.
