Today's business headlines at the NY Times look grim:
Microsoft Plans to Cut 5,000 Jobs
Home Construction Ends Worst Year Since 1959
Sony Expects $3 Billion Loss For Year
Profit Decline at Nokia Comes With A WarningEverything is falling apart, right? But an alternate view is to look at these headlines as a natural part of the business cycle. A recession is supposed to clear out weak players and expose the flaws in business models. Do these stories reveal a systemic disaster, or something more localized? Microsoft is a poorly run company that struggles every time it leaves the safety of its near monopoly on PC operating systems of office productivity software. Home construction should decline the most in generations after making its way through the biggest booms in housing in generations. Sony is another terribly-run company that is living on a reputation built in the 1970s and 1980s. As for Nokia- it's a cell phone company. The industry is saturated with new products, and a new phone is a purchase that is easily put off for another year or two. Cell phone companies, like computer companies, are bound to suffer in cyclical downturns.
So we know we're in a recession. But how bad is it really?