Do You See What I See?

Owners and CEOs of fast-growing companies discuss the likelihood of national and regional recession.

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The heads of America's fastest-growing companies tell: what they watch to alert themselves to changes in the economy; what those signs are telling them now; and what they're doing about it inside their own businesses

While economists announce an official recession whenever the U.S. gross national product declines for two consecutive quarters, the men and women running fast-growth companies across the country have their own distinct and personal notions of what makes for a recession. John Bell says it's when worries about his direct-marketing business give him fitful sleep. To Soni Christensen, a recession means she might lose her new $500,000 design studio. California plastics manufacturer William Czapar is more direct. "A recession," he declares, "is when it hits your profit and loss, no matter what the rest of the economy is doing."

To be sure, this Inc. survey on the economic outlook turned up the usual suspects when folks were asked to name signposts that might signal trouble ahead -- high interest rates, unemployment rates, inflation, the stock market, even the number of help-wanted ads in local newspapers. But for Clarence E. Harris of Calhoun, Ga., a leading economic indicator is "gossip at the post office." Is Harris the kind of character you'd see on reruns of "The Andy Griffith Show," an entrepreneurial Barney Fife? Not quite. His Carriage Industries Inc. employs 1,000 workers and posted sales last year of $103 million.

Who's to say that the guys hanging around the Calhoun post office know any less than Alan Greenspan, chairman of the Federal Reserve System? His take on the economy comes from sheets of bloodless statistics, and numbers don't always tell the whole story. "You can feel a recession coming in your gut," remarks one company owner. "It's like a deer sensing the presence of a wolf that it can't yet see."

Differences within a region

What is striking, when one speaks with the survey respondents, is the divergence of economic outlooks among people in the same region, and sometimes even within the same industry. For depending on one's niche, a recession can be either a curse or a blessing in disguise. Take the Northeast, for example, which is already beginning to feel the effects of the rolling recession that wracked Texas, and before that the Rustbelt. It now is suffering the hangover of an exuberant binge.

Soni Christensen is president of Design East Interiors, in Concord, N.H. The company furnishes and equips model homes, lobbies, nursing homes, and the like. In 1988, when Design East made the Inc. 500 list, it had about 90 active models in its client base, and revenues reached $1.7 million. New Hampshire was hot. Then, very quickly, the bottom fell out of the New England housing market. The government's repeal of the investment tax credit did some of the damage, but mainly the supply of new housing simply outstripped demand. One of Christensen's projects was a condominium complex with 120 units; only 12 were sold.

Christensen had expected to have at least 20 employees by now. Instead, her staff peaked at 16 early in 1988 and has since been trimmed to 4. "This is the first time since I opened my doors in 1982 that I am going backward, not forward, in huge leaps," she says. "Sales are off by nearly 50% from our peak. I'm telling my people, 'Guess what? Be glad you have jobs. So don't be asking me for a raise, and don't pick up the phone and make a long-distance call, either.' My truck is worn out, but I'm not buying a new truck. Our van is worn out, too, and I'm not buying a new van. I'm not even buying clothes, and my daughter can't go on her ski trip."

Now consider the case of Mel Borrin. His New Hampshire real-estate firm, Preferred Properties Inc., sits on the shores of Lake Winnipesaukee, a scenic recreation area less than an hour north of Concord. Borrin specializes in the vacation-home market. Most of his buyers come from Massachusetts, New York, Rhode Island, and Connecticut.

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