Tag Archives: Economy

Small Business Owners Send Clear Message in Poll

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Small business owners are confident, but economic growth is not following due to too many regulations and concerns about energy prices. Those are among the results in the latest U.S. Chamber small business survey. More than eight in 10 respondents want Washington to "get out of the way."

Concerns about regulations and energy prices continue to impede growth for small businesses, according to a recent poll commissioned by the U.S. Chamber of Commerce. The survey, conducted by Harris Interactive between March 27 and April 2, 2012, found that while small business confidence grew in the first quarter of 2012, small businesses continue to lose employees. 30% of small businesses reported laying off employees in the last year.

“This survey confirms that slow gains in economic growth are being undermined by uncertainty over rising gas prices, an onslaught of pending regulations, and stalled pro-growth bills in Congress,”  said Dr. Martin Regalia, the Chamber’s chief economist. “To deliver long-term confidence to small businesses, Washington should act to provide certainty and enact regulatory reform that will boost their ability to grow.”

The poll of 1,339 small business executives found that eight out of ten of small business owners cite higher energy prices as an immediate threat to the success of their business. Concern about gas prices has more than doubled in the last three months, increasing from 10% to 24%. The majority of small businesses (78%) do not think the administration is doing enough to keep prices low, increase domestic sources of energy, or support American job creation. Additionally, three out of four (73%) say the new health care law is an obstacle to hiring new employees.

Overall small businesses see Washington as the problem instead of the solution, with 81% asking Washington to get out of the way and 92% believing the business community is the best entity to lead the economic recovery.

Almost all small business owners (97%) say it is important to vote for a candidate who is a strong supporter of free enterprise; 84% say it is very important. Only 9% of small business owners approve of the job the Democratic Senate Majority is doing on the economy; 87% disapprove. The House Republican majority’s approval rating on handling the economy has increased from 40% approval in January to 46% in April.

“Small business owners are increasingly demanding accountability from members of Congress on how they vote on the issues that impact their operations,” said the Chamber’s Senior Vice President and National Political Director Rob Engstrom. “We’re seeing small businesses unable to hire, or worse, forced to let employees go because of the Senate’s refusal to take up job-creating measures like domestic energy exploration and regulatory reform.”

The survey defined a small business as a company with fewer than 500 employees and annual revenues of less than $25 million.  To read a complete copy of the Q1 Small Business Outlook Survey, please visit: https://www.uschambersmallbusinessnation.com/community/small-business-outlook-survey—march-2012–

Brinegar: Focus Shines on Right-to-Work

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Chamber President Kevin Brinegar explains how passing a right-to-work law will help enhance Indiana’s economy by attracting many new companies that currently won’t consider the state, according to site selection agencies. He also lays out the facts about right-to-work, noting how it does nothing to prevent unions from organizing; it just means workers won’t be forced to join to keep their jobs.  

Kokomo Mayor Says Home Buying Incentive Will Boost Local Economy

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Kokomo is losing money because many of its workers live outside of their community, and thus spend more money there. The city’s mayor believes a home buying incentive will ultimately bring more money to the community. Read this press release and see if you agree:

Indiana cities are often in competition to attract new businesses to their communities. The City of Kokomo, Indiana has developed an incentive program it hopes will attract residents of nearby communities to purchase a house in Kokomo.

The city has enlisted the help of its major employers to draw employees who work in Kokomo, yet live elsewhere, to consider purchasing a home there.

The Kokomo Homeownership Investment Program provides homebuyers with incentives. Among those is a $5,000 reimbursement for exterior improvements on a newly purchased home. In addition a local moving company is offering a ten percent discount when moving a new resident or family to Kokomo.

Kokomo’s largest employers support the program and are promoting it to their workforce. Companies such as Chrysler, Delphi Electronics and Safety, and Haynes International were helped in recent years with municipal loans or abatements, and now these companies are returning the favor by touting Kokomo’s relocation incentives and benefits of living in the community in which they work.

Kokomo Mayor Greg Goodnight explains the economic data that inspired the program, “Twenty percent of our workforce lives outside of our community. The problem is compounded by the fact that this 20 percent earns 30 percent of the income generated here. We’ve been investing our city’s limited financial resources in quality of life projects. Now we are stepping up the campaign to attract our workforce to also live here.”

More Kokomo Homeownership Investment Program details can be found at www.trykokomo.org.

U.S. Jobs Growth Hits Wall

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Tough to sugarcoat this, so I won’t. Here’s an article on jobs growth in the United States and it’s not super encouraging. And according to Erick Erickson of RedState.com, this is the first time the U.S. economy has created net zero jobs since World War II. Will be interesting to see what President Obama says when he addresses Congress next Thursday.

U.S. employment growth ground to a halt in August as sagging confidence discouraged already skittish businesses from hiring, keeping pressure on the Federal Reserve to provide more stimulus to aid the economy.

Nonfarm payrolls were unchanged, the Labor Department said on Friday, the weakest reading since September. Economists had expected a gain of 75,000 jobs. The report underscored the frail economy and kept fears of a recession on investors’ radar.

"The economy is slowly grinding to a halt. The problem, however, on the policy side is that I wonder whether the numbers are truly weak enough to galvanize a political response," said Steve Blitz, senior economist at ITG in New York.

U.S. stock index futures extended losses on the data, while Treasury debt prices rose. The dollar extended losses against the Swiss franc, but rose against the euro.

Adding to the weak tenor of the report, nonfarm employment for June and July was revised to show 58,000 fewer jobs.

The average workweek dropped to 34.2 hours, the fewest since January, from 34.3 hours. Average hourly earnings fell three cents.

Despite the lack of employment growth, the jobless rate held steady at 9.1 percent. The unemployment rate is derived from a separate survey of households, which showed an increase in employment and a tick up in the labor force participation rate.

A strike by about 45,000 Verizon Communications workers helped push employment in the information services down by 48,000.

An acrimonious political fight over U.S. debt, which culminated in the downgrade of the country’s AAA credit rating from Standard & Poor’s, and a worsening debt crisis in Europe ignited a massive stock market sell-off last month and sent business and consumer confidence tumbling.

With the unemployment rate stuck above 9 percent and confidence collapsing, President Barack Obama is under pressure to come up with ways to spur job creation. The health of the labor market could determine whether he wins a second term in next year’s elections.

Obama will lay out a new jobs plan in a speech to the nation on Thursday.

The weak employment data could strengthen the hand of officials at the U.S. central bank, who were ready at their August meeting to do more to help the sputtering economy.

The Fed cut overnight interest rates to near zero in December 2008 and it has bought $2.3 trillion in securities. Many analysts say its arsenal is now largely depleted, although they expect it to do more to try to prop up growth.
 

McKinsey Report Highlights Task Ahead for U.S. Workforce

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A new report from the McKinsey Global Institute projects a daunting task ahead for the U.S. economy: create 21 million jobs by 2020. Oh, and in the near term, we also still need to get 7 million people back to work who are victims of the 2008-09 recession. Chief among possible solutions will be adequate training our workforce to fill vacant jobs in the future. That’s likely why Kris Deckard, executive director of Ready Indiana, was interviewed for the report.

McKinsey relays:

The research analyzes the causes of slow job creation in the period before the recession and during the recovery and the implications of these forces for future job growth. The research projects how the US labor force will evolve over the next ten years and creates different scenarios for job growth based on extensive analysis of sector trends. MGI’s central finding is that a return to full employment will occur in only the most optimistic job growth scenario. This will require not only a robust economic recovery, but also a concerted effort to address other factors that impede employment, including growing gaps in skill and education.

The report offers a range of illustrative solutions based on lessons from US states and other countries that MGI hopes will add to the national conversation on jobs. Findings include:

Recoveries are increasingly becoming "jobless" due to firm restructuring, skill and geographic mismatches between workers and jobs, and sharp decline in new start-ups.

The US needs to create 21 million new jobs by 2020 to regain full employment – and only achieves this in our most optimistic job growth scenario.

The US workforce will continue to grow until 2020, but under current trends, many workers will not have the right skills for the available jobs. Technology is changing the nature of work: jobs are being disaggregated into tasks, work is becoming virtual, and firms are relying on flexible labor (temporary, contract workers). These trends offer new opportunities for creating jobs in the United States, a trend that some companies do not fully appreciate.

Progress on four dimensions will be essential for reviving the US job creation machine: develop the US workforces’ skill to better match what employers are looking for; expand US workers’ share of global economic growth by attracting foreign investment and spurring exports; revive the nation’s spark by supporting emerging industries, ensuring more of them scale up in the United States, and reviving new business start-ups; and speed up regulatory decision-making that blocks business expansion and new investment.

Also view the executive summary and full report.

Why Stock Markets Rise While Economy Struggles

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Like me, many of you may wonder how the stock market can rise while an economy continues to slump. And, also like me, some of you may wonder if NBC thinks you’re a fool — switching the actresses playing the mom on "The Fresh Prince of Bel-Air" with hardly a satisfactory explanation.

Well, Steven Dolvin, associate finance professor at Butler University, at least tackles the first question in a recent column for Inside INdiana Business.

Consider: Unemployment is still high (9.1 percent in May 2011). The depressed housing market is the most undervalued it’s been in 35 years (according to Capital Economics), with foreclosures expected to jump 20 percent from 2010. According to Gallup poll data, average daily consumer spending has declined 39 percent since May 2008.

Meanwhile, since March 2009, the stock market has basically doubled from its lows. Is this a disconnect with reality?

Not necessarily. Studying data from the 2011 Indiana CEO Survey indicates three reasons why the stock market has risen while the economy continues to struggle:

Companies serve global markets. The survey shows what business issues are important to the Indiana CEOs. While several, such as health care costs, employee retention and recruitment, and consistent execution of business strategy have remained flat in terms of importance, “growing the business internationally” has grown in importance. After slipping in 2008 and 2010 as CEOs focused on keeping their businesses afloat, this issue has increased in importance to its 2007 level.

The larger the company, the greater its international focus. For businesses in the S&P 500 Index, more than half their revenue typically comes from outside the United States. Some receive 80 to 90 percent of their revenue from outside our borders. While this international focus keeps their bottom line strong and their shareholders happy, it doesn’t necessarily translate into money spent in the U.S., helping our economy.

Job growth is a lagging metric. The Indiana CEOs were asked if they were going to reduce or add jobs. The survey indicates what you’d expect in a tough economy and recovery: After the recession hit, the likelihood of reducing jobs rose from 2007 to 2009 before beginning to decline. Meanwhile, the likelihood of adding jobs declined steeply from 2007 to 2009, before beginning to increase.

While the likelihood of more hiring has increased, actual hiring hasn’t yet. Actual job growth lags behind the stock market, which tends to be a forward-looking metric. People make investments based on what they think will happen, rather than what’s happening now. That’s why, in terms of job creation as a component of business performance, the stock market anticipates a rosier picture than current reality.

Trickle down takes time. In the survey, the Indiana CEOs said they believe there is more public and private funding available for business success, compared to last year. They say the amount of funding has increased on both the equity and debt sides since the recession. As funding increases, companies can leverage their positions more. This translates to better returns, which leads to happier shareholders. On this idea of more money = more profits, the stock market rises.

NY See You Later! Many Young New Yorkers Plan to Leave Empire State

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If you’ve even visited New York City, you know the cost of living is more than a smidge higher than anything you’ll find in Indiana. Part of that, of course, is because of taxes. But even outside of Manhattan, a lack of jobs is pushing residents of the suburbs — and upstate — to other parts of the country. According to a recent poll, many New Yorkers under 30 plan to flee the state soon. Here’s the report from the Daily News:

Escape from New York is not just a movie – it’s also a state of mind.

A new Marist College poll shows that 36% of New Yorkers under the age of 30 are planning to leave New York within the next five years – and more than a quarter of all adults are planning to bolt the Empire State.

The New York City suburbs, with their high property values and taxes, are leading the exodus, the poll found.

Of those preparing to leave, 62% cite economic reasons like cost of living, taxes – and a lack of jobs.

"A lot of people are questioning the affordability of the state," said Lee Miringoff, director of the Marist College Institute for Public Opinion.

An additional 38% cite climate, quality of life, overcrowding, a desire to be closer to family, retirement or schools.

The latest census showed New York’s overall population actually increased, though parts of upstate shed population and jobs.

A full 53% think the worst is yet to come for the state’s economy, while 44% say things should start improving.

"As the state of the economy fails to recover, New Yorkers see this not as a sluggish rebound, but as a sluggish economy," Miringoff said.

During a visit to Buffalo yesterday, Gov. Cuomo yesterday said attracting and retaining jobs is a priority for his administration.

"We have to keep jobs here and we have to develop new jobs," he said. "And we want to start bringing back jobs from other parts of the country."

A Turn of Luck for the Gaming Industry?

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Business and consulting firm Rubin Brown issued a release last week asserting the American gaming industry has seen a slight boost of late. However, note toward the end of the statement that Indiana gaming saw a slight downturn in 2010. Hopefully, 2011 will be a different story:

The nation’s gaming industry stabilized in 2010 with a slight increase in adjusted gross revenue (AGR) of 0.34 percent over 2009. This was the first time the industry has seen an increase in revenue since 2007 reports RubinBrown, one of the Midwest’s largest accounting and business consulting firms.  Commercial  and Tribal Gaming Stats 2011, available at https://www.rubinbrown.com, pools 2010 data from 448 commercial land-based and riverboat casinos in 14 states with legalized gambling. Data was compiled from state gaming regulatory authorities and the American Gaming Association.

From a regional perspective, the Midwest held steady again in 2010, with the five Midwest states referenced in the report comprising 25 percent of 2010 AGR of the 14 states with commercial gaming. Gaming in the Midwest experienced a $21 million decline in revenues during 2010, which is much improved compared to the $74 million decline in 2009. Missouri and Colorado were the only two Midwest states to see a boost in gaming revenue, with 3.35 and 3.4 percent increases respectively. Other states to see an increase in revenue include Pennsylvania, which led the nation in revenue growth with a drastic 26 percent increase; Nevada, which, although the state only saw a slight increase of 0.12 percent, is faring better than the double digit decrease it saw in 2009; and South Dakota, which experienced a moderate increase of 3.92 percent.

Missouri continues to lead the Midwest in casino revenue growth, bringing in over $1.7 billion in revenue and more than $450 million in commercial gaming tax revenue in 2010. Due to the opening of the River City Casino in St. Louis in early 2010, the St. Louis region increased its AGR by 7.52 percent to lead the market in Missouri, comprising nearly half of state-wide revenue. The Kansas City region followed behind with almost 40 percent and other communities in the state made up the remaining 10 percent. However, with the surrender of St. Louis’ President Casino license and the development of the Isle of Capri Casino in Cape Girardeau, which is expected to bring in over $67 million in new gambling revenues, these breakdowns may change in 2012.

Colorado, the only other state to see an increase in AGR, experienced an increase of $25 million during 2010 and generated more than $107 million in commercial gaming tax revenue. The passage of Amendment 50 by Colorado voters in 2009, which allowed the maximum bet at casinos to be raised from $5 to $100 and permitted properties to remain open 24 hours a day, can be attributed as one of the main causes for Colorado’s revenue increase in 2010.

The report credits the slight increase in overall gaming revenues to the continued economic recovery throughout the nation. Although operators have felt the impact of the Great Recession with reduced consumer spending, mergers, bankruptcies, strict lending requirements and stalled capital projects, the rebound for the gaming industry is starting to occur.

“Gaming continues to expand through changes in gaming legalization, updates in technology and expansion into new markets,” said Chelle Adams, partner-in-charge of RubinBrown’s Hospitality and Gaming Services Group. “One of the trends that we’re currently seeing and expecting to see more of in the next few years is an expansion of non-gaming amenities at casinos, such as entertainment venues, restaurants, spas and golf courses. These additions are being utilized to draw patrons to the casinos’ complete destination experience as several patrons are cutting back on traveling and vacations.”

Despite the growth in Missouri and Colorado, not all Midwest states experienced similar success in 2010. Indiana saw its gaming revenues decline again by a slight 1.27 percent and overall admissions decreased by 0.4 percent, a significant change from the 4 percent increase in 2009. Although AGR and admissions declined in 2010, 1.59 and 3.59 percent respectively, Iowa-based casinos saw patrons spending more per trip on average from the previous year.

Optimism From the Job Cut King

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Forgive the poor E.F. Hutton pun, but when John Challenger talks, people generally pay attention. The Chicago-based Challenger, Gray & Christmas firm is viewed as the guru of job market reports and trends — and John Challenger is its leader.

Usually quick to report on employment cuts and leadership exits, Challenger is out with an analysis that says the economic recovery is no longer "jobless." Here’s some of what he offered:

“The pessimism about the job market is evidenced in latest readings on consumer confidence by the Conference Board and the University of Michigan, both of which declined in March. However, while some might perceive that the job market is standing still, it has actually made significant strides since the end of the recession in several areas, including planned layoffs, private-sector payrolls, unemployment and hiring,” noted Challenger.

In the Challenger analysis of government data it found that, much like the previous two recessions, private-sector payrolls continued to contract following the declared end of the recession. From July 2009 through February 2010, private payrolls experienced a net decline of nearly 1.2 million jobs, according to the latest figures from the Bureau of Labor Statistics’ survey of employers. Since February 2010, however, private sector employment has seen net job gains for 13 consecutive months, adding a total of 1.8 million jobs. As of March, there were approximately 108.6 million Americans on private sector payrolls, which is about 93 percent of the pre-recession high of 115.6 million.

Employment is also growing in the Bureau of Labor Statistics’ household survey, which is used to establish the unemployment rate.  Similar to private payrolls, overall employment continued to decline during the six-month period following the end of the recession. However, over the past 15 months, there have been 10 months of gains for a net increase of 1.9 million newly employed Americans.

Meanwhile, the unemployment rate, which initially continued to rise for four months following the June 2009 end of the recession to a high of 10.1 percent in October 2009, fell to a 24-month low of 8.8 percent in March.  By contrast, unemployment peaked 19 months after the end of the 2001 recession and, following the recession that ended in March 1991, unemployment continued to rise for 15 months.

“There is no reason to think that these positive trends will not continue, even with the threat of higher fuel costs. Based on our tracking of planned job-cut announcements, which tend to be a forward-looking indicator of how employers see future business conditions, there are no signs of sudden reversal of fortune,” said Challenger.

Monthly job-cut announcements are at their lowest levels since the late 1990s.  In fact, the 130,749 job cuts announced between January and March represents the lowest first-quarter total since 1995.

At the same time, planned hiring announced in the first quarter totaled 112,942, which is more than double the 53,675 planned hires announced during the same period a year ago. 

BSU Economist: U.S. Jobs Boost in March a Sign of Recovery

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It’s no secret things have hardly been rosy in the U.S., or the world for that matter, when it comes to economic progress in the past two years. But Ball State University economist Michael Hicks sees light at the end of the proverbial tunnel, citing American job growth in March as a key indicator. A recent release from BSU asserts:

Reports that the American economy added about 216,000 jobs in March is solid evidence that a recovery is taking hold, says economist Michael Hicks, director of Ball State’s Center for Business and Economic Research.

The U.S. Department of Labor announced this morning that businesses created 216,000 jobs last month, after adding 192,000 jobs in February. The past two months mark the fastest two-month pace of job creation since before the recession began. Factories, retailers, education, health care and an array of professional and financial services expanded payrolls.

"But it will take about two years with job growth at double this rate to nudge the unemployment rate back down toward the 5.5 percent level that might be the new normal," Hicks says. "The March numbers do indicate that the 50 cent run-up in gas prices hasn’t yet turned the economy backward, but most certainly, job growth would’ve been stronger at $3 a gallon prices.