Tipping Points, Tripping Points

Maybe tripping points makes more sense. You see, back in January, I spent several days discussing possible tipping points that could affect the economy in 2006. Tipping points are events, which trigger changes in the status quo. Sometimes they seem like insignificant events when they occur, however, when looking at them later, they turn out to be the event, which set into motion major changes.

Economic tipping points are events that affect the economy. As I stated back in January, there are several possible events that could drastically affect the economy in 2006. That is why I believe 2006 is going to be a very interesting year for all of us.

One of the tipping events that I mentioned back in January and again last week involves the Avian Flu. After writing last week about making at least minor preparations, I was amazed at reading some of the reports that appeared this week.

You see I believe the flu will arrive here in the US. It is not a matter of if, but when. Now, as to whether it mutates into something that can be passed between humans is another issue all together, but as you will see, it does not require that to cause us economic heartburn.

Monday, two articles were published that should cause you to sit up and take notice. First, a report by ABC news over the weekend about a speech given by Michael Leavitt, the Secretary of Health and Human Services, recommending that Americans start storing some canned tuna and powdered milk under their beds. He stated that the bird flu will arrive here as it is being spread by migratory birds and there is no way to keep migratory birds out of the US.

US spy satellites are actually tracking infected flocks. A very real concern is with the nation's poultry producers, whose flocks could be wiped out by infection from these migratory birds. (Read the entire article here.)

Then in another article published here, the International Monetary Fund believes that the bird flu is likely to deal a harsh blow to the world economy.

Now there are a couple of things to consider here. If the flu mutates and becomes transmittable between humans, then all bets are off. They estimate that 50% of the population would catch the flu. The economic impact of quarantines and the like would be huge.

But, if the virus does not mutate, and I would guess that there is a pretty good chance that it will not, we still could see problems. Chicken happens to be a low cost source of quality protein, not only here in the US, but around the world. The resulting shortage of chicken could cause death by starvation to increase worldwide.

The travel restrictions that could be implemented to try to reduce the spread of the Avian Flu will affect the economy as well. We live in a "just-in-time" world. Supply chain management has increased profits for companies around the world for years. In fact, in some cases, the savings in supply chain costs are sometimes the only way a company manages a profit in today's highly competitive environment.

But in times of travel restriction, that efficiency becomes a liability as we run out of critical goods, food being a primary example, prescription drugs being another.

Why stock up on a few food items? Because I believe as this story develops we will see a growing awareness by the general public. As people start hearing more and more about the problem, they will begin to stock their pantries with extra food. Once it starts, you will see stores with empty shelves. Just like in Florida before a hurricane hits, only when travel restrictions are enforced, it will be more difficult for stores to restock.

This awakening by the public could occur as early as the end of March, most definitely when the first confirmed case of Avian Flu turns up in the US. So I figure we have about two weeks to make some preparations before things get difficult. It could play out a little longer, but I would not bet on it. One thing for sure, you do not want to be trying to buy groceries when the panic starts. It will be worse than a clearance sale at Macy's.