Catching Up on tariffs, GDP, rates, factory orders, ThredUp, KPIs, Labubus, and the wisdom of Tom Sawyer's Island.
For some reason, the economic news just kept coming even though I was on vacation. Oh, well.
Let’s do a little catch-up.
Tariffs kicked in. Yawn. Although the Swiss panicked that Rolex watches would increase in price from $10,000 to $15,000.
That started a discussion, but only among hedge fund managers.
Don’t misunderstand my comments as indifference. The tariffs do have an impact, but many people can’t keep jumping whenever a ‘new’ tariff is put in place. Give it a week or two and it’ll change.
GDP was 3% for Q2. Yeah, we knew in Q1, when it dropped by 0.5%, that it would have to rebound.
And that was the rebound.
GDP for the first half of the year was 1.25%; that was modest.
Consumer spending dropped then rose.
Exports dropped then rose.
Those were the drivers, folks. We are a consumption society. We don’t even have to go out our front door to buy something.
The Bank of England cut its rate to 4%. The Federal Reserve did not. It’s still at 4.25-4.5%.
The cool kids think that a rate cut in September is still likely.
Why September? The Fed is dark in August because it’s time to hit the waves. Or the Amalfi Coast.
Given the amount of money they are spending on redecorating their offices, they should be spending it at the Destiny RV Resort in Blythe.
Man, I’m not back 10 minutes and I’m already digressing.
Factory orders dropped 4.8% from the prior month. Ouch. Let’s dig into that.
New Orders for all manufacturing were down 4.8%, but there are categories.
Excluding transportation – that would be things like cars, buses, etc. – orders were up 0.4%
Excluding defense – things that either go boom or help things go boom – orders were down 4.7%.
Durable goods – down 9.4%. Yeesh.
Picking and choosing a few sub-categories:
Non-defense aircraft & parts: down 51.8%. Last month, it was up 231%.
Ships and boats – down 20%. That was part of the transportation category.
Material handling equipment – down 4.7%. You don’t need to buy new forklifts when you don’t know how much inventory will be coming into your warehouse.
Or you can make the old ones last longer.
Transportation was a significant driver of the numbers. You can view the details here.
Speaking of the economy…
What is a ThredUp?
Historically, it has been a penny stock, meaning it trades for less than $5 per share.
It was only in May that the stock went up above $5. It was less than $1 last November.
It’s now trading at $10 per share.
So, what do they do?
You mail in your gently used higher end clothes, shoes and accessories. ThredUp picks and chooses what it will put on its website for sale.
When sold, you get the proceeds, minus a fee of course.
It’s basically an online, higher-end thrift store; it brings sellers and buyers together.
Wait, isn’t that eBay? I digress.
When it went public in 2021 - in a time of economic uncertainty – they figured that folks may sell their stuff for a little extra dough, and buyers will buy to save some dough.
I think this is a great concept, but the only reason they popped up on the radar is because its stock doubled in the last 4 months.
Here is the interesting part. They have yet to post an operating profit, much less a positive net income.
Last year’s sales were $260,000,000. That’s a lot of gently used clothes to not make money on.
And its stock is up 10x from less than a year ago. There’s a lot of money out there, folks.
FWIW, eBay had 2024 sales of $10,280,000,000 and net income of $1,975,000,000. And they pay a dividend.
Now that’s some dough I can bid on.
KPIs
That’s what management consultants call Key Performance Indicators.
KPIs are what many larger businesses use because they have a finance department.
However, many small businesses are using KPIs.
So, what is a KPI? Whatever you want it to be. Here are examples:
Sales growth, Income growth, Income per employee, sales per employee, net income etc.
Those are the common ones, and something that can be easily taken from your QuickBooks app.
I recently had a conversation with a very successful small insurance broker.
All incoming calls are recorded. Her VOIP phones – Voice Over Internet Protocol – can provide her with the length of time of each call, the number of calls, and tie that in to the internet marketing she has set up through Facebook and Instagram.
She constantly trains new hires, setting expectations and utilizing her own KPIs to monitor progress, both for the firm and for each employee.
She can track how many calls or clicks are converting to sales; that’s one of her KPIs.
Some employees are out of state, so she uses these metrics to gauge the WFH (work from home) productivity of each employee: # of calls, time on the phone, etc.
She’ll listen in and give live coaching.
KPIs are not just limited to business school graduates; any business owner can set their own metrics to measure their success. Put some thought into what your KPIs should be and start measuring.
Then give immediate feedback. Because that’s how you grow your business.
Just in case you thought the economy was slowing down…
… and things were tightening up, along comes a Labubus.
It is a plush doll with sharp teeth.
Labubus are toys from Pop Mart, a Chinese company. They sell in mystery boxes for $20 to $30 but have been resold online for thousands of dollars.
A limited-edition doll made in collaboration with Vans shoes, could be the latest rendition to reach the five-figure mark.
Labubus seem to be following in the footsteps of famous collectibles like Ty Beanie Babies and Cabbage Patch dolls.
At any rate, if little dolls are worth thousands of dollars, I would argue, once again, that there is quite a bit of money in this economy.
Robert Niles, the editor of themeparkinsider.com, was lamenting the closing of Tom Sawyer’s Island at Walt Disney World, as he had worked four years there as a raft driver at the attraction. The lessons he learned were:
Study and work until your knowledge becomes instinct. - You need to know your craft, whatever it might be, if you want to be successful at it.
Always help the people around you when they struggle. - You should always help the folks around you, whether they are employees, vendors, customers, or colleagues. That’s what makes us human. It also translates into good customer service.
No matter what happens to the river, just keep driving the raft. – The Boomer corollary is “Keep your nose to the grindstone.” The Gen Xer corollary is “Focus, Daniel-san!”.
Enjoy the summer and keep driving the raft!
