Barking Dogs

For those that don’t know, I have a senior golden retriever.  She came to us with a great name, Penny Lane, becoming my favorite dog (and I’ve been lucky to have some good ones in my life).  She’s slowing down a bit more this year, but still has lots of energy.  For instance, I spent Mother’s Day weekend at my brother's place in Corona, CA.  Penny loves his place because there are lots of rabbits in the neighborhood, something she doesn’t get much of in Mid-City Los Angeles.  While walking her in a relatively unfamiliar neighborhood, she gets barked at by dogs behind gates.  Her response is usually to bark back.  This tends to escalate the barking of the instigating K-9, often resulting in other dogs on the block joining the chorus.

Like barking dogs, economic indicators tend toward similar patterns.  One will get the ball rolling and suddenly several others are behaving in a like fashion.  Take the recent decline in output America experienced in the first quarter of this year.  You may recall, gross domestic product declined 1.4 percent from January through March.  Prior to this print, however, there were signs of weakness developing.  One early “barker” was data from the Institute for Supply Management.  Their two monthly releases showed signs of slowing as early as January.  But we didn’t know the economy slowed officially until April.  Another potential indication of weakness ahead was in equity markets (although the Russian invasion of Ukraine was getting started at about the same time, so it is difficult to determine which was rattling things most).  Retail sales data then began demonstrating economic slowing as well as other indications of a weakening economy.  Now virtually every economic dog is barking about deceleration.

Give it enough time and the barks begin to fade.  The same is true for economic slowdowns.  Periods of roughness feel especially bad when markets are making top spots in the nightly news, but that will go away, and a new period of calm will usher in some quiet.  Sure, there will be a random bark here and there, but the cacophony won’t be the only thing you hear.  For now, we haven’t yet reached the next period of tranquility, and the block we’re walking down seems long.  More barking dogs could lie ahead.  Woof.