Tag Archive for 'economy'

Now is the winter of our economic discontent

If you’re wondering how the economy’s doing, here’s what top news outlets are reporting: “U.S. GDP Fizzles in the fourth quarter” (Marketwatch.com); “Economy grinds to a halt in last quarter 2015” (Money.CNN.com).

But there’s good news: Q1 2016 GDP is projected to be in the 2% range, unlike the two previous first quarters in 2014 and 2015, which were both negative. It’s asking a lot of the other three quarters to put together a good year when you start out in the hole.

One of the ways I take the pulse of the Main Street economy is through our weekly online poll. Recently we asked this question: “Halfway through the 1st quarter, how’s the local economy producing sales for you?” When I compare the responses we got this time to similar questions over the past four or five years, I see movement toward the middle from the top and bottom. Let me explain.

The top group, 13% reporting sales as “great,” is lower than past polls, which have been consistently closer to 25%. The bottom group, who are “in trouble,” came in at 3%, down from around 15%.

Then we have the two in the middle: Those who said their sales volume was off represents about a third of our sample, a little higher before; and those who reported sales as good but not great, increased to half of our responses, up from about 35% in the past. By the way, our poll tracks very closely to the January NFIB Small Business Index and a new AICPA survey.

Our latest measurement reflects the current condition of Main Street businesses: fewer are doing great, while the “just okay” and “not quite as good” are increasing, with the bottom group succumbing to the insidious condition CNSNews.com just reported as a “record 1o years with the U.S. economy less than 3%.”

With a decade of stagnation, the last seven years of which can be attributed to the anti-business rhetoric and policies of the Obama administration, any performance improvement by small firms is attributed to better management practices and the kind of dint of will only found on Main Street.

Economists I regard are predicting 2016 GDP growth of about 2.5%. With the condition of the global economic and geo-political challenges, achieving this level of annual growth will be largely on the backs of the American consumer and the discipline – past and present – of millions of Main Street small businesses.

Here’s good news no one else is talking about: When the economy finally does convert from our 10-year winter of discontent to an actual expansion, surviving small businesses will be so organizationally and financially sound that they will be set to make more profits than anyone has ever seen.

Write this on a rock … But only those who survive.

Poll results: Your local economy and sales

The Question:
Halfway through the 1st quarter, what’s the condition of the local economy and your sales?

13% - Our economy is strong and sales are great.
50% - Our economy and sales are good, but not great.
34% - Our economy is weakening — sales volume is off.
3% - Our economy is very weak, and we’re in trouble.

Jim’s Comments:

I think our poll response reflects exactly what the economy is doing: fewer are doing great, more are getting a little better and, after seven years of a moribund economy, most of the troubled companies have already closed up. I’m going to have a lot more to say about this in my Featured Column next week, so stay tuned.

Thanks for your abiding support of our poll each week. Check out our new one below.

With the success of Bernie Sanders and Donald Trump, is the political midpoint of the American electorate shifting left?

Poll Results: What grade would you give President Obama?

The Question:
From the standpoint of the impact on your business, what grade would you give President Obama for his time in office?

5% - A
6% - B
6% - C
9% - D
74% - F

Jim’s Comments:
As you can see, President Obama is a failure to three-fourths of our small business audience. It’s been clear from day one that the president has been ambivalent to the Main Street economy atbest, and against us at worst. In seven years in office, the only policy he’s proposed that looks anything like pro-business is the Trans-Pacific Partnership trade deal he cut last year.

On the other side of the coin, the anti-business stuff is a long list, which I’m going to innumerate in an article in the near future. Stay tuned. Thanks for participating.

And thanks for your abiding support of our poll each week. Check out our new one on how you would vote today, click here.

To listen to more about these poll results, click on the link below.

Small business owners have give Obama a grade

Is 2016 trending as the year of our next recession?

One of the distinct markers of the United States is what has been termed our “consumer economy.”

It’s pretty intuitive.

Having a consumer economy means that the main driver of GDP (gross domestic product), and therefore, the engine of economic growth, comes from spending by consumers. Other major elements that make up the entire U.S. economy include private investment, government spending and trade.

America is not unique in this distinction, but no other major economy in the world compares to the U.S. in this definition. For example, American consumers represented 71% of GDP in 2013, having risen from 62% in 1960. Around the globe, Japanese consumers are 61% of their economy, with only 36% in China. And in the major European countries, consumers average less than 60% of GDP.

The U.S. has experienced an increasingly robust consumer economy for generations. But one of the implications that has arisen for, let’s say, the past half century is that consumers are more likely to spend their money than save it. There are many reasons for this imbalance: America is the strongest economy in the world; has a diverse credit industry with creative products; and produces and imports a lot of cool stuff, which Americans want even if they have to borrow, instead of save, to get it.

The world economy has long benefited from the exuberance, rational or not, of the U.S. consumer. Indeed, during the global slowdown of the late 1990s and early 2000s, the U.S. consumer almost single-handedly kept the global economy from collapsing. But today, with a declining global economic scenario, will American consumers reprise their earlier role as economic champion? A new data point may provide that answer.

Recently, in our online poll, we asked small business owners if the significant drop in gasoline prices ($1/gallon in six months) was manifesting as increased spending by their customers. Less than one-fourth of our respondents reported such a trend was evident or slightly evident, while almost half said they saw no such evidence.

One of the reasons for the consistent moribund U.S. economy since 2008 has been the debt-reducing behavior of both American businesses and consumers. But it now seems the consumer’s cash conservatism continues unabated because, in addition to our poll results, other surveys indicate people are using the gas price dividend to reduce debt and save.

During the first quarters of 2014 and 2015 the U.S. economy went negative, producing one half of a technical recession, while the Dow Jones Index rose to new record highs. But 2016 has begun with stock indexes retrenching toward bear territory, a decline in both imports and exports, and no apparent help from consumers. Consequently, a negative Q1 this year may prove to be just the first one, rather than a one-off like the past two years.

Write this on a rock … The best way to not participate in a recession is to be prepared for one.

POLL RESULTS: As a citizen and business owner, what do you see as the greatest threat to you and yours right now?

The Question:

As a citizen and business owner, what do you see as the greatest threat to you and yours right now?

18%The poor condition of the economy
7% - Climate change
18% - Expansion of radical Islamic terrorism
2% - Not enough gun control
56% - Over-taxed and over-regulated by the government

Jim’s Comments:
The economy sucks for many Main Street businesses, and terrorism’s on everyone’s minds. But when we asked small business owners what was the greatest threat to them and theirs, those two issues only garnered about one-fifth of our responses each. As you can see, almost six of ten believe their greatest threat is encroachment of the government.
Think about that. The thing that most small business owners lay awake at night worrying about is how their government will hurt them. What’s wrong with this picture? #GODHELPUS
Thanks for playing along. Please participate in this week’s poll below.
http://survey.constantcontact.com/poll/a07ebz4037kii24k7ss/start.html

Results of Blasingame’s 2015 Predictions and His Score

Here are my 2015 predictions and what happened. My prior 14-year record is 73% accuracy.

Prediction: Geopolitics, geo-competition and the supply/demand dynamic for crude oil won’t find equilibrium anytime soon, causing prices to fluctuate, but average less than $70 per barrel. Plus 1 - Crude averaged around $50 per barrel for the year

Prediction: With consumers buoyed by low gas prices and six years of recovery fatigue, the U.S. economy will grow, but global economic headwinds and currency influences on exports will result in U.S. annual GDP averaging below 3%. Plus 1 – Owing to a disastrous Q1, annual GDP is closer to 2%.

Prediction: Consumer optimism will produce small business contribution to GDP greater than any year since the Great Recession. Minus 1 – Incredibly, in the sixth post-recession year, consumers, the small business sector and economy are all going in the wrong direction.

Prediction: An improving economy, plus anticipation of a business-friendly 114th Congress will cause an upward trend in small business optimism toward NFIB Index’s 42-year average of 100 points. Minus 1 – NFIB Index reports trend was no better than flat.

Prediction: Small business loan demand will increase as growth opportunities exceed the ability to fund them with organic capital resources. Plus 1 – The increase came mostly from non-traditional sources, like asset-based lenders.

Prediction: With organizational productivity maxed out, even marginal economic growth will cause small and large businesses to increase hiring. Plus 1 – Hiring did increase. But exposing the irrelevance of U3, not enough to drop true unemployment to 5%.

Prediction: Continued concern about the fragility of the U.S. and global economies will cause the Fed to maintain monetary easing by keeping the Fed Funds rate unchanged. Plus 1 – I took a lot of heat on this from every economist I know – most predicted a June rate increase.

Prediction: In King v Burwell, Supreme Court will rule 5-4 that Obamacare was written to exclude subsidies to states with Federal exchanges. Minus 1 – In the Bizarro World of the Roberts’ Court a 6-3 majority contrived that “only” really means “every.”

Prediction: The GOP-controlled Congress and President Obama will agree on tax reform in 2015.  Plus 1 – Nothing sweeping, but year-end reforms will help small business.

Prediction: Congressional Republicans will thwart the execution of Obama’s executive order on immigration. Plus 1 – This happened, with help from the Courts.

Prediction: The Sony cyber-assault by North Korea will elevate corporate America cyber-security to a de facto national security level. Plus 1 – Corporate cyber-security spending increased by 20%.

Prediction: Unprecedented foreign state cyber-assault on a U.S. corporation will cause the government to stop companies from responding to such threats on their own. Plus 1 – These conversations did happen.

Prediction: In political theater redux, a Clinton and a Bush will become presidential candidates, but neither will be their party’s front-runners by year-end. Push – Got Bush, missed Clinton. Surprised Bush hasn’t done better and Clinton’s baggage hasn’t hurt her.

Prediction: Oregon will defeat Florida State in the Rose Bowl on New Year’s Day. Plus 1 – A 59-20 whuppin’.

Prediction: Alabama will win the inaugural NCAA Division I Championship Game Jan10. Minus 1 – My first ever football miss.

Write this on a rock …This year I went 11 for 16, or 69%, taking my 15-year record to 72.7%. How’d you do?




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