Economic Slowdown Slowing Down
I don’t have all the economic sources nor the historical data that the FED has, but I do have data that is very telling of the economic conditions: data from the company that I work for. One of the systems we use is the National Change Of Address (NCOA). It allows us to keep our addresses fresh in our customer database so that we aren’t wasting our mailing resources. It is offered by the US Postal Service at a nominal cost given the potential savings in direct mail cost.
We ran the NCOA right before the holiday season last year and there was considerable relocation taking place with our consumers. We just recently ran the NCOA again, and there is a significant slowdown in the volume of movers. Interestingly enough, the slowdown started right about the same time that the FED dropped interest rates.
What does all this mean? Well, for us, the NCOA indicates the housing market. More than 90% of our customers own their own home, so a lot of change of addresses means volatility in the housing market. A slowdown in the NCOA means things are starting to stabilize in the housing market. A more stable housing market is good for business.
I’m predicting a slight dip over the next couple of months because of the sensationalistic nature of the media when it comes to reporting economic data. Also, most economic indicators are not real-time, meaning that seeing a bad economic indicator today typically means that it took place 3-6-9 months ago. Look for a mild 3rd quarter and a strong 4th quarter in 2008 provided there is not major political upheaval.