Forget economists and the Bureau of Labor Statistics. When we want a reality check on the economy, we turn to Ken Hendricks, founder and CEO of ABC Supply, based in Beloit, Wis., the nation's largest distributor of roofing supplies, with $600 million in annual sales and 110 locations. ABC Supply is the only company that has ever gone from #3 to #2 to #1 on successive Inc. 500 lists, a record that is a testament to Hendricks's economic perspicacity. He did it by buying failing operations in declining markets and turning them around.

Here's what he says about the current economic climate: "The Midwest is in fine shape, with solid growth coming from a diversified industrial base. The Southeast is showing signs of life again, with the exception of Florida, where things have gone flat. The Northeast looks as if it has finally begun its recovery, as have most of the Middle Atlantic states. In the Pacific Northwest the boom is over, but the economy is still growing at a nice, sustainable rate. Texas is OK, with modest but steady growth. But the real story is California. Some people say it's bottoming out. Baloney. Between military cutbacks and the most antibusiness climate anywhere in the United States, they aren't even close to the bottom yet. I started my business in Texas in 1985, so I've seen some real busts. What California is about to experience will be twice as bad as Texas."

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