Although Friday's Commerce Department report showed February's leading economic indicators up 1.1 percent, a close analysis reveals that the bulk of the rise was caused by psychological and financial factors. Soaring consumer confidence and rising stock prices accounted for three-fourths of the advance.
Further, many experts feel it's too early to predict a recovery with confidence, as the index has often proven unreliable and premature. In 1982, for example, the LEI index rose 1.2 percent in February and April, but the recession continued until yearend. Also, "a runup in stock prices does not necessarily signal better times ahead, as the stock market has made some major predictive errors lately," says Merrill Lynch's chief market analyst Robert Farrell. And T. Rowe Price ex-CEO Charles Shaeffer once told me, "Throughout history, stocks and business conditions often traveled in opposite directions."
SUCCESS SECRETS: "There are some very important rules for success that they don't teach you in business schools," says John McCormack, in a new book, "Self-Made in America," $19.95. (The author, after losing over $1 million in Wall Street, developed "Visible Changes," the country's fastest-growing, largest-grossing hairdressing chain.)
Excerpts: "Don't worry about formal education; most successful entrepreneurs have not done well in the educational system. . . Choose a mentor, someone who made it on his own, whose wisdom and experience are relevant to your ambitions My mentors weren't Harvard MBAs, they were immigrants who worked hard and saved money to invest in their businesses. . . Live on 20 percent of your income, and save the other 80 percent. That's the most important lesson I learned from my mentors. . . Don't look down on any kind of work. If Ray Kroc had looked down on making milkshakes, we wouldn't have McDonald's. . . You'll know your ideas are good when others turn them down."
CEO CORNER: When I asked John Hess Jr., CEO, Hess Apparel, Inc., a women's clothing specialty chain, his success principles, he replied, "I follow details closely. I always remember the old slogan, 'Responsibility cannot be successfully divorced from continuous touch with detail.' And because I can't be on the sales floor of our seven stores all day, I get the best people I can for that and I train them in my way of thinking." When I asked, "How do you get top people?" Hess replied, "I'm talking to people all the time, in Maryland and when I travel, and I often find them when I'm not looking. When I meet a top person I hire him or her, whether I have an immediate opening or not. They don't have to be brain surgeons or have an IQ of 180, but they must have top personal qualities. We always have room for good people."
APRIL SHOWERS: Income taxes are due two weeks from midnight tonight. . . "Cable TV further widens the gap between the rich and the poor." (Caller on Larry King show, WBAL Radio). . . "It is a sign of a manager's effectiveness that her staff trusts her enough to complain." (Working Woman, March.). . . "If unemployed, don't be shy about networking; you're only asking your contacts about job leads." (National Business Employment Weekly.). . . "People may doubt what you say, but they will believe what you do." (Bits & Pieces.). . . "Demand Better Results, and Get Them" is worth reading in Harvard Business Review, March-April. It says: "The capacity for demand making is the most universally underdeveloped management skill."