Businesses hope election season’s end will boost fortunes
Northwest Indiana business leaders say the most powerful economic stimulus yet may be just around the corner: the end of the 2010 midterm elections.
“No matter what happens with these elections, at least they will be over with and people will settle down and we’ll have more consumer confidence,” said Bill McCabe, broker/owner at Century 21 Executive Realty in Schererville.
McCabe was one of 16 business leaders at the Times Board of Economists quarterly meeting at Innsbrook Country Club on October 20, all of whom cast a vote for getting the elections over with and getting on with the business of America.
The negativity of the political debate on both sides is making things appear worse than they are for consumers and businesses, board members said.
“That’s what’s driving some of the pessimism right now,” said Tom Collins Sr., president of Luke Oil, operator of 22 gas stations and convenience stores in Northwest Indiana.
Board members pointed to numerous indicators that show an economy on the mend, including the almost 7 percent rise in the Dow Jones Industrial Average this year.
Still, unemployment remains stubbornly high at 9.6 percent with 14.8 million people unemployed, according to the U.S. Bureau of Labor Statistics. That fact is a powerful contributor to the lack of consumer confidence that appears to be holding back the U.S. economy.
That is why the Times Board of Economists’ ranking for the economy in the third quarter was marginally lower than its previous ranking of the second quarter.
Looking ahead, board members foresee little improvement in their sectors in the next three months but some improvement in the economy as a whole.
However, their rating of the current state of affairs, as well as their outlook, was markedly brighter than one year ago. A year ago, board members ranked the health of their sectors in the region at an average score of 5.05 and the health of the local economy at just 4.38. In the most recent survey they gave their sectors a 5.86 score and the local economy a 5.36.
Watching the bottom line
Because of the cautious outlook, businesses of all shapes and sizes are working furiously to control costs, according to Rex Richards, executive director of the Valparaiso Chamber of Commerce and the Valparaiso Economic Development Corp.
“They are all watching their money because there just is not a lot of consumer confidence,” Richards said.
In Lake County, the unemployment rate has hovered around 11 percent, which translates to about 10,000 more people unemployed on average in 2010 than at the end of 2008, according to David Rose, regional president of Horizon Bank, which has more than 30 branches in Indiana and Michigan.
“So you just equate that 10,000 people with how many fewer cars those people are buying, how many loans are not being injected into the economy and so on,” Rose said.
Keeping an eye on the elections
In the media industry, some confidence is coming back, with ad revenues up sharply over last year’s depressed levels, according to Leigh Ellis, president of Radio One Communications.
After the elections, everyone will be keeping an eye on the Federal Communications Commission and any new regulations it might promulgate, Ellis said.
“The election will change a lot of things, because the wireless industry is really controlled by the federal government,” Ellis said.
In the past two years, the ties between government and the auto industry have become just as tight as those between government and media.
“I feel like I’m part of the government, the way they have their hands all over our business,” said Tim Roper, owner of Smith Motors Auto Group, which operates three area dealerships.
Small businesses such as auto dealerships will be looking to see what a new Congress may do with taxes on dividends and capital gains, Roper said.
Consumers’ grocery shopping habits show things are getting better, with higher-priced items such as organic foods back on shopping lists, said Donald Weiss, president of WiseWay and Paylow supermarkets, which have eight stores in the region.
“Remember, 90 percent of the people are working and those people that are working are spending,” Weiss said.
Health care, government struggling
Unemployment, the weak economy, and “the rising tide” of “Obamacare” have hospitals looking at ways to operate more effectively and efficiently, according to Gene Diamond, Regional CEO of Sisters of St. Francis Health Services, with five hospitals in the region.
The health care system he oversees will have to cut about $140 million per year in expenses for four or five years to make up for revenue reductions that will come about because of the federal health care overhaul, Diamond said. That equates to about a 3 to 5 percent budget cut each year.
“Even if you assume, and a lot of people do, that the Republicans will take the House and maybe come close in the Senate, it’s not likely any profound changes are going to be made in Obamacare, given the political structures that exist,” Diamond said.
Local government in Indiana continues to struggle with the recession as well as decreased revenue because of state-mandated property tax caps.
“What’s probably on the minds of a lot of public officials right now is the jobless rate and them being added to it in the forthcoming election,” said Michael Griffin, Highland clerk/treasurer, who noted he is not up for election until next year.
All the right moves
In the world of investments, Bruce Quint, vice president at Merill Lynch in Merrillville, placed a strong vote of confidence in Federal Reserve Chairman Ben Bernanke. The academic and policymaker, who has guided U.S. fiscal policy since 2006, has made the right moves in relation to the financial crisis, Quint said.
“I think we are the luckiest country in the world because we have Chairman Bernanke right now,” Quint said. “And that’s the story of America: We always have the right person at the right time.”
But just in case people can’t take all the peace and prosperity that will come after the elections, don’t worry, board members said, another election is just two years away.
“It will be a presidential election, and you will hear all that talk again of how terrible things are and how it is all going to heck in a handbasket,” Richards said.