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The Economy is Brutal, but Their Business Booms
At Skinner Baking in Omaha, Andres Orellana spreads some flour over rolls of dough.
Marilyn Adams, USA Today
Amid the worst economic conditions in 70 years, sales of sweet, fluffy pastries made by James Skinner Baking of Omaha are hot, hot, hot.
Family-owned Skinner Baking saw its 2008 sales revenue rise 18% from 2007’s. In December, sales jumped a record 25%. The firm, founded in 1911, bakes coffeecakes, fruit-filled Danish, cinnamon buns and other time-honored goodies sold at supermarkets nationwide. Skinner’s ovens are working six days a week and the firm is hiring to keep up with demand.
“This is comfort food,” says Audie Keaton, Skinner’s vice president. “Instead of going out to breakfast, I think families are staying home and eating Danish.”
Skinner is among several types of businesses that are bucking the economy’s downward spiral: flourishing not just in spite of the recession, but because of it.
Even as the nation’s automakers, big banks, retailers and others are laying off hundreds of thousands of workers and fighting for survival, some companies large and small quietly are setting sales records and even expanding because they provide products or services that worried, cost-obsessed consumers are willing to pay for.
A few of the recession’s beneficiaries are big public companies with household names: Wal-Mart, (WMT) McDonald’s, (MCD) Family Dollar. (FDO)
They earned profits last year, and their stock prices soared because they kept doing what they do well: selling stuff that everyone needs, cheaply.
But many businesses that are thriving during the recession are not big or famous.
“They are small or midsize companies with few levels of management that can make changes quickly,” says Mark Perry, an economics professor at the University of Michigan-Flint.
“The role of entrepreneurs might be even more important during a recession,” he says. “Their ability to be nimble and innovative and adapt to change become key advantages.”
History seems to bear that out: Many long-standing businesses and jobs have been created during and right after a downturn.
Monopoly, which owner Hasbro (HAS) says is the world’s most popular board game, was patented during the Great Depression. Microsoft, (MSFT) which made co-founder Bill Gates the world’s richest man, was launched in 1975, after the 1970s recession.
Losses and gains
During the last recession, in 2001-02, the U.S. economy lost nearly 2.7 million jobs overall, the Small Business Administration (SBA) reports. But new and existing businesses with fewer than 20 employees gained 853,074 jobs during that period.
Hard times also seem to spawn many one-person businesses, more so than good times.
Sellerina
over 1 year ago
158 comments
Way to think critically Luke! I healthy skepticism of political news, but you remind me to question economic news. I don't understand economics well, but that does not mean I should adopt the conclusions of others without question.
Luke
over 1 year ago
30 comments
Worst economic conditions in 70 years? How is this being judged? Things are in bad shape, but calling this the worst in 70 years seems to show a lack of the history of the economy. Without looking at more recent downturns that may have been similar, let's take a look at a single time frame.
In the late 70s and into the early 80s, the economy tanked much worse than what we are seeing right now. Unemployment rose from a low of 5.8% in 1979 to a high of 10.8% in 1982. The prime rate rose from a low of 6.25 in 1976 to a high of 20% in 1980 (imagine trying to buy a house then). Inflation rates rose from a low of around 6% in 1977 to a high of around 14% in 1982. As bad as things are today, how would the economic climate look if we were sitting on double digit inflation, unemployment, and interest rates? Add to that the situation with gas. I must say I don't remember the gas crisis and it may have resolved by 1979. But in the late 70s while the economy was truly falling over a cliff, we had expensive gas (for the time) and it was being rationed. People were waiting in lines at gas stations for long periods of time to buy 5 gallons of gas.
Let's not try to candy coat how things are, but at the same time, let's be honest about the situation. The economy operates in cycles. We are in a down cycle, and it's a bad down cycle. No exaggeration is necessary.