I had the pleasure of speaking at the GAWDA Eastern Zone regional meeting in October of 2008 at the Hampden Country Club in Hampden, Massachusetts. At this meeting I shared my thoughts on some of the potential impacts the current economic turmoil may have on our industry and thought these comments would be beneficial to share with the readers of CryoGas International.
As this issue goes to press, we note that much has changed since October. These changes make many of my remarks even more important today.
My October presentation began with a few observations on how the economic and political environment had changed since I last spoke to a GAWDA audience at the annual meeting in San Francisco, just one year earlier. I noted that in September 2007 the DJIA was over 13,800; it closed on October 10, 2008 at 8,451 (the DJIA fell below 7,600 on November 20, 2008). The Wall Street Journal Prime Rate was at 7.75% in September of 2007; it was reduced on October 6, 2008 to 4.5%. (Today it stands at 4.0%). The unemployment rate was at 4.7%; it rose to 6.1% in October, and reached 6.5% in November. Capital Markets were strong in ’07 and debt was readily available at attractive rates. Today, debt (particularly new debt) has virtually dried up. Last year it looked liked Hillary Clinton was going to win the White House (according to Dick Morris). Well, you all know what happened in that regard.
As I spoke in October, I noted that according to economists in the latest (at the time) Wall Street Journal forecasting survey, the odds of recession in the next 12 months were 89%. In December of 2008, the National Bureau of Economic Research determined that the US has been in recession since December 2007. US GDP contracted in the third quarter and is likely to contract in the fourth quarter of this year, as well as the first quarter of 2009 — marking the first time US GDP has contracted for three consecutive quarters in more than 50 years. The unemployment rate is expected to reach 6.8% by June 2009.
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