“Pessimism is at an all time high with pessimists outnumbering optimists by a ratio of 16 to 1.” – UNC economic survey

RESEARCH TRIANGLE PARK, N.C. – Steve McQueen, having just saved the life of Candice Bergen, is gut shot, stunned, confused and dying in “The Sand Pebbles” when he utters: “What the hell happened?”

A lot of people are asking the same question – pardon the language – when talking about the economy. It’s gone to hell. It’s on the elevator to the bottom of Dante’s Inferno. And is the bottom in sight? Wasn’t it just a few months ago the markets were at record highs, mortgages were easy to get and Wachovia was a pillar of corporate stability?

Driving home this economic confusion Tuesday (after Friday, when the state confirmed the unemployment rate hit 7 percent) were two separate events:

  1. A chart in the latest quarterly economic forecast from the good folks at UNC’s Kenan-Flagler Business School and the American Institute of Certified Public Accountants.
  2. North Carolina biotech executives wanting money from the state to keep some life-science firms afloat.

Those only made the current economic outlook more alarming.

Just from April to November, look at how these projection/expectation numbers have changed – actually, have gone off the deep end:

Firms expecting capital spending cuts:

  • April, 22.8 percent
  • July, 24.8 percent
  • November, 39.7 percent

Expecting layoffs:

  • April, 16.3 percent
  • July, 18.7 percent
  • November, 31.1 percent

Expecting hiring freezes:

  • April, 22.6 percent
  • July, 23.3 percent
  • November, 36.2 percent

Expecting compensation freezes:

  • April, 17.1 percent
  • July, 18 percent
  • November, 30.8 percent

Expecting facility closings:

  • April, 7.5 percent
  • July, 7.1 percent
  • November, 9.9 percent

The survey also tracked travel restrictions, but who travels anymore? Well maybe some do since gas prices have plunged – at least temporarily. That’s the only GOOD economic news lately. (I cut the price of filling my tank from $72 in July to about $32 on Sunday – treated myself to McDonald’s as a result.)

One encouraging sign in the survey: The percentage of financial executives expecting to increase outsourcing actually declined to 7.8 percent in November from 9.5 percent in July.

So how bad is the economy getting? You know the old saying – a recession is when your neighbor loses his/her job; a depression is when you lose yours.

Note this comment from Mark Lang, an accounting professor at UNC-CH:

"Up to now, respondents have generally been pessimistic about the economy as a whole, but relatively optimistic about their own companies. More respondents now anticipate decreases in revenues, profits and reduced hiring for their own organizations."

So, what happened? Well, gas and energy prices exploded. The mortgage crisis blew up. And the world discovered too many American banks were Third World in caliber.

Now, we are all gut shot and wondering what the hell happened. Like McQueen, I wish I knew why. Just when life seemed to be coming together and bliss with Candice beckoned, he was snuffed.

What’s next for us? Keep fighting for a better day. We’re not dead yet.