How do you feel about the job market and the economy these days? Positive, negative, mixed?
According to a Harris Poll conducted in February, Americans have mixed feelings about the job market and economy, and the majority of us are concerned about covering our expenses this year—all understandable. Perhaps the most surprising finding is that 48 percent of Americans believe we still are in a recession. (more...)
“What the world lacks is willing customers, not willing workers.”
That statement in this week’s The Economist magazine may be one of the most insightful among all the worried economic chatter in the media these days. The magazine’s cover story this week covers the woes of the Chinese worker, no longer docile migrant laborers willing to make pennies. According to the magazine, Chinese wages have risen 17 percent over the last year alone. Moreover, “Chinese labor costs tripled in the decade after 1995, but output per worker quintupled.”
The article continued: “China’s economy relies too much on investment and too little on consumer spending…. Letting wages rise at the expense of profits would allow workers to enjoy more of the fruits of their labor.”
A small-business initiative working its way through Congress has been making headlines lately. It has the potential to provide $30 billion in new capital for community banks, which would use it as a foundation for lending to small and medium-sized businesses. Whether lawmakers will pass the bill is the main question.
I have a different question: What do you think? Do you want or need a loan right now?
At the risk of oversimplifying things, let’s say the typical markers of a recession are high unemployment, low consumer confidence, low consumer spending, and low business output. A perfect economic policy would put the jobless back to work, thereby rebuilding consumer confidence and kick-starting consumer spending, which would rev up the engine of business.
The government doesn’t have a perfect economic policy at its disposal. In fact, other than creating new positions and hiring people to fill them, the government doesn’t have any way to put the jobless back to work directly. It can do so indirectly by ordering some domestically made goods (for example, some government cars or an aircraft carrier or something like that) or by funding infrastructure (new or repairs).
How else can the government encourage consumers to spend? It has quite a few additional ways. For example, the stimulus package (the American Recovery and Reinvestment Act of 2009) provided federal tax cuts; expanded unemployment benefits; and increased spending on education, health care, and infrastructure. It’s hard to say if the stimulus is working, or how well, but we do have some signs of hope. The PMI has been higher than 50 for nearly a year; capacity utilization in many industries has been on the rise for almost as long; and consumer spending on durable goods has been on the rise too. On the other hand, the unemployment rate isn’t falling very fast at all, and consumer sentiment is improving slowly at best.
So let’s set the data aside and go straight to the source. Anecdotal evidence says that many fab shops are busy, but how busy? If funds were available for borrowing, would you head to the bank for a loan to buy some equipment, or is demand for your products not strong enough yet? In other words, how good or bad is the timing of the small-business initiative? Call me at 815-227-8262 or send me an e-mail (ericl@thefabricator.com). I’d love to hear your thoughts.
