Archive for the ‘Economic Development’ Category
Tuesday, April 2nd, 2013
What are small business owners most worried about these days? According to the Newtek Business Services monthly survey, 60% of business owners believe uncertainty in Washington has had the greatest negative effect on the economy.
Of the remaining, 22% believe income tax increases have had the greatest negative effect on the economy and 18% believe payroll tax increase had the greatest negative effect on the economy.
The full March 2013 results showed the following:
|Which of the following items has had the greatest negative effect on the economy?
||Payroll Tax Increase
|Income Tax Increase
|Uncertainty in Washington
Barry Sloane , Chairman, President and CEO of The Small Business Authority said, “With all of the data obtained in today’s society, our independent business owners are still most concerned over the confusion and uncertainty in Washington.
Despite payroll tax increases, Obamacare, and a weak economy, the uncertainty over what the Federal Government is doing to the business climate is our small business clienteles’ biggest worry. The uncertainty and lack of confidence in Washington continues to put a damper on future decision making, risk taking and economic forward thinking.”
The results of this survey align with what several economists and financial leaders have told the TechJournal. The economy is poised to grow, but the biggest headwind is the political uncertainty.
We don’t know about you, but we think politicians need to start doing more work and less grandstanding. Politics is the art of compromise, something many in DC have apparently forgotten or no longer believe.
Wednesday, March 20th, 2013
The growing deficit of skilled labor needed to fill in-demand jobs is causing a drag on employers across the globe. A significant number of employers in the ten largest world economies said that extended job vacancies have resulted in lower revenue and productivity and the inability to grow their businesses.
global CareerBuilder survey, conducted online by Harris Interactive© from November 1 to November 30, 2012, included more than 6,000 hiring managers and human resource professionals in countries with the largest gross domestic product.
“The inability to fill high skill jobs can have an adverse ripple effect, hindering the creation of lower-skilled positions, company performance and economic expansion,” said Matt Ferguson , CEO of CareerBuilder.
“Major world economies are feeling the effects of this in technology, healthcare, production and other key areas. The study underlines how critical it is for the government, private sector and educational institutions to work together to prepare and reskill workers for opportunities that can help move the needle on employment and economic growth.”
CareerBuilder shows the results of its survey in this infographic
Wednesday, February 6th, 2013
The next 40 years will see an unprecedented transformation in the global urban landscape. Between 2010 and 2050, the number of people living in cities will increase from 3.6 billion to 6.3 billion, with nearly all of that growth occurring in developing countries. Technology will play a transformative role in how these cities are managed and operate.
By 2025 there will be 37 megacities, each with a population greater than 10 million; 22 of those cities will be in Asia.
The consequences of this new phase of urbanization on the global economy and on existing urban infrastructure and resources are already being felt and are spurring innovation in urban design, technologies, and services.
Worldwide Smart City 2013 Top 10 Predictions
The Smart City movement is emerging and growing as a significant force of innovation and investment at all levels of government.
To assist government organizations, IDC, premium market research partner with Global Information (GII), has identified the top 10 predictions for 2013 that will most heavily influence the direction and magnitude of technology investment, management, and evaluation.
The goal of this report is to draw attention to events that exemplify the strategic shifts reshaping the ways cities operate, shifts that will require city leaders to make smart and sometimes very difficult decisions.
This worldwide set of Smart City predictions is a list of prioritized business drivers and technology trends that our team believes will shape the local government IT landscape in the context of an economically and socially challenging 2013 time.
The predictions captured in this report outline the collective opinion of the IDC Smart City team of analysts representing all regions globally.
Among the top 10 predictions are:
1. In 2013, 70% of Worldwide Spending on Smart City Projects Will Be Focused on Energy, Transportation, and Public Safety, and 90% of These Will Be at Least Partially Funded by National or International Government.
2. At Least 50% of Smart City Programs Will Be Initiated at the Line-of-Business or City-Function Level.
3. Worldwide Spending on Smart Water Solutions Will Reach $1.8 Billion in 2013.
The full list of predictions and free sample pages from the full document are available at http://www.giiresearch.com/report/govt261272-worldwide-smart-city-top-10-predictions.html
Friday, January 25th, 2013
State and local governments waste billions of dollars annually on economic development subsidies given to companies for moving existing jobs from one state to another rather than focusing on creating truly new positions, according to a study released today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC.
“What was long ago dubbed a Second War Between the States is, unfortunately, raging again in many parts of the country,” said Greg LeRoy , executive director of Good Jobs First and principal author of the report.
“The result is a vast waste of taxpayer funds, paying for the geographic reshuffling of existing jobs. By pretending that these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud.”
Interstate job piracy is not a fruitful strategy for economic growth, LeRoy noted: “The costs are high and the benefits low, given that a tiny number of companies get huge subsidies for moving a small number of jobs.” LeRoy added: “Moreover, the availability of relocation subsidies allows companies that have no intention of moving to extract payoffs to stay put.”
Interstate relocations have microscopic job effects
Summarizing studies demonstrating that interstate relocations have microscopic job effects, the report also reviews the history of economic competition among the states and presents eight case studies of those areas where job piracy is most pronounced.
The case studies cover metropolitan areas such as Kansas City, Charlotte, New York and Memphis, where companies get subsidized to move short distances across state borders; states such as Texas, Tennessee, Georgia, New Jersey and Rhode Island that are aggressive users of relocation subsidies; and states such as Illinois and Ohio, which have given big retention or “job blackmail” packages.
The report recommends that states stop subsidizing companies for relocating jobs from other states, noting that four-fifths of the states already refuse to pay for intrastate job relocations.
The report also recommends that states end their business recruitment activities that are explicitly designed to pirate existing jobs from other states. It also suggests a modest role for the federal government: reserving a small portion of its economic development aid for those states that amend their incentive codes to make existing jobs ineligible for subsidies.
The report, entitled The Job-Creation Shell Game, is available at www.goodjobsfirst.org/shellgame.
Tuesday, January 15th, 2013
Almost three-quarters of Americans think the pre-recession economy may be gone for good. According to the latest COUNTRY Financial Security Index survey, just 27 percent think the old, pre-recession economy will return. Half of these Americans don’t expect to see it return until 2015 or later.
What’s more, entrepreneurs are less likely to expect a return to a pre-recession economy compared to private company and government workers.
They are also less confident about their finances in this new economy.
- Only one in five entrepreneurs (20 percent) think the pre-recession economy will return. This compares to 34 percent of government workers and 30 percent of private company workers.
- While 56 percent of entrepreneurs are confident they can meet their financial goals and needs in a new economic reality, confidence is higher among government workers (67 percent) and private company employees (66 percent).
Tuesday, December 18th, 2012
The U.S. economy would be headed for a healthy growth trajectory in the 3 to 4 percent range in 2013 if it were not for the fiscal restraint and uncertainty in the public sector, says TD Economics.
Instead, we’re likely to see a slightly more sluggish growth of 1.9 in 2013, down from an estimated 2.2 percent in 2012. With more clarity by the second half of the year, though, the economy could rise to 3 percent growth by 2014.
“Without fiscal drag, the U.S. economy would be headed for a growth trajectory in the 3-4% range in 2013,” says TD Chief Economist Craig Alexander .
Pace of growth changing little from 2012
“The worst of the consumer deleveraging cycle and its dampening effect on economic growth appear to be over. But just as the private sector is set to provide a welcomed tailwind to the economy, it will be met with worsening cross winds from public sector restraint.”
Alexander acknowledges that the result is likely to be a pace of economic growth that is little changed from the past year.
TD Economics forecasts economic growth to average 1.9% in 2013 – down from an estimated 2.2% in 2012. However, by the second half of next year, clearer fiscal policy should lead to resurgence in private demand, placing the economy on a stronger footing with 3.0% growth in 2014.
Still waiting for a path around the fiscal cliff
With a few weeks to go before deep spending cuts and tax hikes arrive and hamper economic growth, a deal to avoid them between the White House and Congress has yet to be reached.
“The fact that businesses are pulling back on investing, despite healthy balance sheets and record low interest rates, is a sign that fiscal cliff concerns have already taken a toll on economic growth,” notes Alexander.
TD Economics estimates that if all tax hikes and spending cuts are allowed to take place as scheduled, it would cut 3.0 percentage points from real GDP in 2013.
“Our forecast assumes a deal will be made that avoids plunging the U.S. economy back into a recession in the first half of 2013,” says Alexander. “However, spending restraint and tax increases will still cut economic growth by 1.3 percentage points in 2013,”
Alexander warns that until there is more clarity on the political front, the fiscal situation represents the largest source of economic uncertainty.
As housing rebounds, faster growth is waiting in the wings
The constraint on growth posed by fiscal policy comes amid signs that housing has entered a self-sustaining recovery. Home prices have risen consistently through 2012 while delinquencies and foreclosures have fallen.
The rise in home prices has been substantial – prices are up 5.0% from year-ago levels – and appears sustainable. The fall in construction activity over the last several years has cleared the supply overhang and allowed rising demand to pull up prices.
“A strengthening housing market recovery alongside rebounding consumer credit markets is a good reason to expect acceleration in economic growth,” says Alexander. “The past vicious cycle in the housing market is turning into a virtuous one, giving every reason to believe that a more familiar recovery will spring free.”
The Federal Reserve is doing everything it can to support growth
The housing market has also been the focus of the Federal Reserve, whose latest round of quantitative easing has focused on purchases of mortgage-backed securities.
“The Fed has pulled out all the stops to support the recovery in housing and offset some of the drag from fiscal policy,” notes Alexander. “But, as several Fed members emphasized, monetary policy can provide some relief, but it can’t single-handedly offset the fiscal headwind.”
“A clearer path to fiscal consolidation alongside continuation of accommodative monetary policy will be the necessary cocktail for stronger economic growth in 2014,” concludes Alexander.
TD Economics provides analysis of global economic performance and forecasting, and is an affiliate of TD Bank, America’s Most Convenient Bank.
The complete findings of the TD Economics report are available online athttp://www.td.com/document/PDF/economics/qef/qefdec12_us.pdf
Friday, November 16th, 2012
Business leaders are willing to accept losing tax breaks for a corporate tax rate reduction, KPMG survey says.
Business leaders realize that if they want to see meaningful U.S. corporate tax reform they will need to give up some tax preferences in exchange for a lower statutory corporate tax rate, according to a survey by KPMG, the U.S. audit, tax and advisory firm.
The tax debate going on in the U.S. Congress right now shows signs of heading toward tax reform and closing tax loopholes, both of which will surely affect the corporate world.
In a survey of more than 680 business executives, KPMG found that almost 80 percent of respondents from both U.S. domestic and multinational companies said they would be willing to accept the repeal of certain tax incentives in exchange for the lower overall tax rate.
What are they willing to give up?
Among those who support the concept of corporate tax reform, accelerated depreciation (68 percent) and the manufacturing deduction (66 percent) were the two most cited tax incentives that respondents were willing to give up. Surprisingly, research and experimentation tax incentives were cited by 52 percent of respondents overall, the findings revealed.
“Business leaders understand the fiscal challenges of the United States and are increasingly recognizing that a hard stance on incentives with respect to corporate tax reform will not work,” said Hank Gutman, principal with KPMG LLP and former chief of staff of the U.S. Congress Joint Committee on Taxation.
“They know that for effective reformation of business taxation to take place, incentives once considered untouchable need to be up for debate.”
Corporate tax rate the top concern
The U.S. corporate tax rate is the top business tax concern among those surveyed (40 percent) followed by taxation of international operations (24 percent) and financial statement disclosure issues (17 percent).
Of particular note, of 289 domestic companies surveyed, 16 percent said that employee benefits and executive compensation is their top business tax concern.
“Many commentators believe that the goal of U.S. tax reform should be to replicate the results of the 1986 Tax Reform Act, which simplified the tax code, broadened the tax base and eliminated many tax preferences,” Gutman said. “But today the fiscal challenges are very different.
“The reality is that any corporate tax reform will have to be at least revenue neutral, which will create winners and losers in the business sector,” Gutman continued. “As a result, some of the objectives being discussed for corporate tax reform may end up being mostly aspirational.”
Many say tax system is seriously flawed
The survey also revealed that 36 percent of respondents said they felt the corporate tax system is seriously flawed and needs a complete overhaul while another 59 percent said the system has some flaws and needs some reform.
Concerning a question on what those polled think is flawed about the U.S. corporate tax system, respondents most named a tax rate that is too high (76 percent) and foreign source income that is not properly taxed (51 percent).
If the corporate tax rate is reduced, an overwhelming majority of respondents (82 percent) expect the new corporate tax rate to be 29 percent or less, down from its current statutory high of 35 percent.
“Reduction of the corporate rate is very important,” Gutman said. “Proponents believe this will make the U.S. more attractive to foreign direct investment and reduce incentives to move income off-shore.”
When asked how the government will make up for the revenue shortfall if the corporate tax rate is reduced to 30 percent or less, a majority of total respondents (64 percent) expect the government to reduce business tax preferences while 25 percent of the audit committee/board respondents and 48 percent of CFOs expect the government to increase tax rates on the capital income of high-net worth individuals.
In other survey findings:
- The majority (56 percent) of those polled said that lowering the corporate tax rate is seen as more important than reforming the taxation of non-U.S. source income.
- Most respondents (40 percent) do not plan to be actively involved in efforts to shape the outcome of the corporate tax reform debate while 33 percent were unsure about their plans.
- Moreover, 66 percent of respondents said they were taking a “wait and see” approach to preparing for corporate tax reform because it has not yet achieved enough of a footing to warrant action.
KPMG’s “2012 Tax Reform Survey” was conducted by the firm’s Tax Governance Institute between July and mid-September of 2012. A total of 684 business executives were polled, including directors of tax, vice presidents of tax, chief tax counsels, chief financial officers, controllers, treasurers, audit committee members and chairs, and board members and chairs.
A report with complete survey results is available at www.kpmg.institutes.com.
Thursday, October 18th, 2012
Small and midsize enterprises (SMEs) in emerging countries are expanding and flourishing financially while their counterparts in the developed markets — despite more difficult market conditions — are confident of an economic upswing in the near future.
So says an Economist Intelligence Unit survey sponsored by SAP AG (NYSE: SAP),
Finding and keeping new customers, attracting talent and operating efficiently stood out as top challenges worldwide, while companies in emerging markets see effective use of technology as a key priority in achieving growth.
Asked about their top business priorities for the next 12 months, respondents in developed and emerging markets appear to share broadly similar goals: growing sales and earnings.
Fifty-three percent of those in developed markets and 55 percent of those in emerging economies cite growth as a top business priority. In India, the figure is 76 percent and in the UK, 71 percent. The lowest showings are in France, at 25 percent, and Russia, 35 percent.
SMEs Expect Their Businesses To Grow
SMEs expect to support growth plans by hiring additional staff. Of those surveyed, 94 percent stated that revenues remained flat or increased over the last three years. Twenty-eight percent reported increases of more than 10 percent and 39 percent responded with up to 10 percent growth. Looking ahead, 96 percent of respondents expect either a flat or positive revenue development over the next 12 months.
The research was based on a survey with more than 1,000 executives of SMEs, with an annual turnover of US $20-$750 million, and on a series of in-depth interviews with senior managers of SMEs.
Respondents and interviewees came from developed economies of France, Germany, Japan, the UK and the U.S. and emerging economies of Brazil, China, India, Mexico and Russia.
“We believe that especially in today’s economic climate, entrepreneurs and small to midsize businesses make up the backbone of the economy — they have the ability to drive innovation, job creation and economic stability,” said Eric Duffaut, president, Global Ecosystem & Channels, SAP AG.
Expansion Beyond Home Markets
Asked about their business priorities for the year ahead, SME managers in all surveyed economies said that expanding their business into new markets is one of their top business priorities.
Twenty-eight percent of the executives interviewed in developed countries strongly agreed that they have to enter foreign markets to keep their competitive edge. In comparison, 22 percent of respondents in emerging economies believe that is the case.
“The survey findings are significant because they reveal a high degree of confidence among managers of SMEs that they can achieve growth in the period ahead,” said Christopher Watts, a contributing editor of the Economic Intelligence Unit and author of three articles analyzing the online survey.
“Given the critical role of SMEs in driving both developed and emerging economies, this confidence is a very positive signal.”
Key findings of the survey include:
- Government support crucial for growth: SME executives indicate the most significant obstacle in the external business environment is government bureaucracy and regulation — 88 percent cite this as an obstacle. The growing tax burden is also a significant concern (85 percent). Executives in emerging markets are more likely to cite government or legislative issues as an obstacle than those in developed countries.
- Sales and earnings top business priority: Growing sales and earnings is cited as a top priority by 60 percent of smaller companies and 47 percent of midsize companies.
- Obstacles to growth: According to respondents, the three main internal obstacles to growth were finding and keeping new customers (79 percent), hiring and retaining people with the right skills (78 percent) and operating the business efficiently (76 percent).
- Internationalization: The biggest business opportunity cited by respondents is expansion into new markets or expansion of the markets themselves, especially high-growth markets such as China and Brazil. Sixty percent of respondents agree that they need to compete in more international markets.
- Leveraging IT critical in emerging countries: Becoming more efficient and using technology more effectively over the next year is among the top three priorities of those surveyed. Forty-six percent cited using technology more effectively as a business priority. In emerging countries this is especially important with India (72 percent), Brazil (75 percent), Russia (33 percent), China (44 percent) and Mexico (33 percent). Accordingly, 60 percent of respondents say they are automating more tasks and functions now than three years ago.
- Difficulty accessing capital: Fifty-six percent of executives say they have become more concerned about debt in the past three years and 46 percent say they have become more worried about access to financing. Executives in emerging markets are more likely than those than in developed markets to cite these concerns. Among smaller companies, 34 percent say limited access to financing is a major obstacle, while among midsize companies, the figure is 23 percent.
- Steps to grow the business: The measures that SMEs are taking to exploit their business opportunities include securing new financing (40 percent), hiring outside experts (33 percent), gathering information and market data (31 percent) and increasing or redirecting spending on training (31 percent).
The complete survey results are available free of charge from the Economist Intelligence Unit’s Management Thinking website. For more information, visit the SAP Newsroom.
Monday, October 1st, 2012
U.S. small business employment continued to grow slowly in September, while hours worked and compensation rose. Revenue in August declined for the sixth consecutive month.
These are among the results for the monthly Intuit Inc. (Nasdaq: INTU) Small Business Employment and Revenue Indexes, which together provide a current picture of the economic health of the nation’s small businesses.
The Small Business Employment Index shows that employment rose by 0.2 percent in September, which is an annualized growth rate of 2.5 percent. The growth equates to approximately 40,000 new jobs created in September, although Intuit is recalibrating the employment index and expects these numbers to change. Average monthly compensation grew by 0.6 percent, or $17, an increase from the growth of $2 seen last month. Average monthly hours worked increased by 0.18 percent, or 12 minutes. The index is based on data fromIntuit Online Payroll and covers the period from January 2007 through Sept. 23.
The Small Business Revenue Index indicates that August small business revenue fell by 0.4 percent from the previous month. Continuing July’s trend, the retail industry, along with the accommodation and food services sector, saw the biggest declines at minus 0.7 percent respectively. Construction followed with a decline of 0.6 percent. The index is based on data from QuickBooks Online and covers the period from January 2005 through Aug. 31.
“This month’s indexes bring both good and bad news,” said Susan Woodward, the economist who worked with Intuit to create the indexes.
“The bad news is that while revenue rose earlier in this tepid recovery, they are now dropping for most industries. In addition, small business employment is growing very slowly, and is essentially flat.
“Couple that with the slow employment growth of less than one-tenth of a percent for big businesses, and we see a slim chance of full employment anytime soon.
Big comeback for startups seen
“The good news is that more people are going into business for themselves. After five years of declining self-employment beginning in January 2007, we began seeing a big comeback starting in November 2011.
“Nearly 600,000 additional self-employed folks have been added since then, and there are now 14.2 million people who are self-employed. One theory is that the decline in revenue per business may reflect the entry of these new businesses into the economy.”
Small Business Revenue Index
Small businesses overall saw a decline in revenue in August. The health care and social assistance saw the smallest decline of all the industries, at minus 0.3 percent, which is slightly less than the 0.4 percent decline seen in the previous month. The health care sector, has however, had the longest decline, starting in November 2011.
||August Change in Revenue
|Accommodation, food services and drinking places
|Professional, scientific and technical services
|Real estate and rental and leasing
|Health care and social assistance
The Intuit Small Business Revenue Index is based on data from more than 100,000 small businesses, a subset of the total QuickBooks Online financial management user base.
Small Business Employment Index
Based on September’s numbers and revised national employment data from the Bureau of Labor Statistics, Intuit revised upward the previously reported August growth rate to 0.2 percent from 0.16 percent. This equates to 50,000 jobs added in August, up from a previously reported 30,000 jobs, though these numbers are expected to change once the index is recalibrated.
Increase in Hours Worked, Increase in Compensation
Small business hourly employees worked an average of 107.2 hours in September, an increase of 0.18 percent, or about 12 minutes, from the revised figure of 107.0 hours in August, making for a 24.7-hour workweek.
Average monthly pay for all small business employees rose to $2,768 in September, an increase of 0.6 percent, or $17, from the August revised figure of $2,751 per month. The equivalent annual wages would be about $33,200 per year, which is part-time work for many small business employees.
Small Business Employment by Geography
The Employment Index showed growth in overall employment in September for all regions except for the West North Central and the Middle Atlantic divisions, which fell by 0.13 percent and 0.05 percent respectively. A state-by-state breakdown showed the largest employment increases in Washington and Michigan, a trend that continued from last month. New York and Oregon saw the largest decreases.
|U.S. Census Division
||Percent Change in Employment
|East North Central
|West North Central
|East South Central
|West South Central
Small Business Employment by U.S. Census Division continues to grow in most parts of the country. The data reflects employment from approximately 84,000 small business employers, a subset of small businesses that use Intuit Online Payroll. The month-to-month changes are seasonally adjusted and informative about the overall economy.
||Change in Employment
Small Business Employment increased for most states in which Intuit Online Payroll has more than 1,000 small business firms. The month-to-month changes are seasonally adjusted and informative about the overall economy.
Tuesday, July 31st, 2012
By 2020, 65 percent of all jobs in the United States will require some form of postsecondary education and training, while the South will require 57 percent, according to the new Georgetown study released today. Virginia, Maryland, North Carolina, and the District of Columbia are the only exceptions.
Postsecondary demand for jobs in the South ranges from 72 percent in Washington D.C. to 43 percent in West Virginia.
While job growth in the South (20 percent) is relatively strong compared to the nation (17 percent), many parts of the region are trapped in an economic cycle known as a low-wage/low-skill equilibrium. In this equilibrium, high-skill, high-wage industry lacks the incentive to locate in the region and incentives for workers to pursue postsecondary education and training are weakened commensurately.
Once an economy falls behind in producing high-wage, high-skill jobs, it can be difficult to catch up, and the South will need to invest in education and postsecondary training in order to break the cycle.
Educational attainment levels are improving in the South, but the rate of growth is declining.
- Between 1970 and 2010, the demand for postsecondary education within occupations for the South grew at an average annualized rate of 4 percent (compared to 3 percent for the nation).
- Between 2010 and 2020 the demand for postsecondary education within occupations is forecast to grow at an average annualized rate of 0.6 percent for the South (compared to 1 percent for the nation).
The study finds that jobs in the South requiring high school or less were lost in the recession and are not coming back.
- The southern employment profile in construction and in retail was artificially inflated prior to 2007 due to the financial bubble.
- The South is unlikely to see a full recovery in blue collar construction jobs and retail. This is because the more conservative credit market will ensure that construction and other credit-driven industries will not return to their former employment levels until after 2017. As employment and earnings growth in these industries slow, there will be a commensurate slow growth in consumer-led industries like retail trade.
- Jobs in many southern states are also concentrated in old-line industries like manufacturing and natural resources, where productivity gains will continue to slow job creation.
The study finds that government, retail and healthcare will continue to be the biggest employers in the South.
- The region is home to more than 41 percent (nearly one million) of the jobs in coal mining, natural gas and petroleum extraction. Analysts predict these areas to be the fastest growing job-creators, but they only represent 3 percent of the jobs in the South in the coming decade.
- Government is the region’s top job provider, projected to grow 16 percent by 2020.
- Second highest is retail trade, expected to grow by 13 percent by 2020, followed by the healthcare services industry, which will employ seven million people by 2020.
Inadequate demand will ensure brain drain of postsecondary talent to neighboring states, especially from Western Virginia and Louisiana. Though states are diverse and many are buoyed with natural resource advantages, a large share of the region will need an aggressive multidimensional strategy that mixes educational improvements with economic development. This multi-faceted approach is necessary because if a state emphasizes education without an emphasis on creating or attracting high-paying and high-skill jobs, brain drain intensifies.
A Decade Behind: Breaking Out of the Low-Skill Trap in the Southern Economy is comprised of a full report which contains a state-by-state analysis and an executive summary. The seventeen state-by-state analysis includes Alabama, Arkansas,Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, Washington D.C. and West Virginia.
Friday, July 27th, 2012
The so-called “creative economy” is seeing record-breaking growth in online work, with earnings and job opportunities far outpacing the traditional employment economy around the world, according to the Elance quarterly Global Online Employment Report
Significant findings include skyrocketing demand for creative talent and traditional jobs moving online.
“The ease of working online — coupled with the ability to instantly connect with a highly specialized global talent pool — is driving massive adoption of online work,” said Fabio Rosati, CEO of Elance. “For the first time, demand for technical talent is being matched by equally strong demand for creative talent.”
Q2 Highlights from the Report
Elance’s Q2 results set new records, with nearly 200,000 new job posts and contractor earnings of $47M. The number of businesses hiring on Elance jumped 35% over the same quarter a year ago. More than 80,000 of the new jobs posted in Q2 were in the Creative category, up 60% over a year ago.
Rise of the Creative Economy
While global economies remain uncertain, Elance’s leading indicators reveal business optimism, hiring growth and several hot job markets.
The new ‘Creative Economy’ is particularly vibrant; demand for creative skills such as web design (+574%), voice acting (+295%) and content writing (+256%) were each up significantly over a year ago. Companies are investing heavily in creative talent, signaling a shift in how businesses engage customers and commitment to growth.
Europe Sees Bright Spots
With the 2012 Summer Olympics just a few days away, London proved to be a city on the move as the top earning city in Europe, where hiring was up 25% over last quarter.
While economic recovery continues to elude parts of Europe, online work is contributing positively to economic growth. In Southern Europe, Italy appears to be breaking out of a stalemate to experience 43% growth in online hiring and 74% growth in online earnings over last year.
Despite Greece’s record 22% unemployment rate, the country experienced a 33% increase in online hiring and 32% increase in online earnings over last quarter. In Eastern Europe, Slovak Republic saw online hiring jump 332% in one year, while Hungary and the Czech Republic saw triple digit increases of 248% and 519% year over year respectively.
Latin America Heating Up
Online work surged in markets worldwide, with Latin America in particular showing strong business optimism with increased hiring of independent professionals across Central and South America. Brazil saw a 104% increase in hiring, Chile realized a 225% increase and Colombia a 172% increase year over year.
Professionals working in Latin America also saw tremendous growth in work opportunities, with Chile (+104%), Venezuela (+91%) and Mexico (+43%) all seeing significant increases in contractor earnings over last quarter. Contractors in this region are increasingly being tapped for creative talent, as 51% of earnings came from this category in Q2.
U.S. Growth Fastest in Hawaii, North Carolina and Tennessee
In the U.S., businesses and contractors continued to fuel online job growth as more independent professionals ditch the cubicle and look online for more opportunity. Overall, earnings grew in 41 out of 50 states. States like Hawaii (+53%), North Carolina (+47%) and Tennessee (+33%) showed some of the biggest jumps in Q2, as online work continues to make its mark across the country.
Rural America Comes Online
Rural America is proving itself as more than fields and farmlands, with businesses in towns like Littleton, N.H. (with a whopping population of 5,800) creating jobs for hurting economies around the world. Businesses hiring online professionals are driving online job growth, and increases in demand for online talent over last quarter are triple-digit in towns like Littleton, N.H., (+702%), Southfield, Mich.(+316%) and Littleton, Colo. (+288%).
The adoption of the online work model has proven significantly beneficial, compared to the traditional job market in these states, where unemployment is currently 5% in New Hampshire, 8.5% in Michigan and 8.1% in Colorado.
Traditional Jobs Shift Online
While technology remains the top earning category for online jobs, more professionals in traditional careers are leaving the cubicle lifestyle for the freedom of online employment.
Skilled professionals like manufacturing designers (+241%), architects (+198%) and family attorneys (+179%) are joining the online work community faster than ever, with triple-digit increases compared to Q2 last year.
Engineering is another job category defying the conventional market, with skills like Chemical Engineering (+182%), Electrical Engineering (+126%) and Civil Engineering (+100%) increasing exponentially year over year.
Monday, July 2nd, 2012
Innovation Works, the Ben Franklin Technology Partner of Southwestern PA, a statewide economic development organization that supports technology commercialization and company growth through innovation, will award up to $800,000 in technology commercialization funding to universities, early-stage and/or established companies based in Pennsylvania.
Draft proposal submissions for funding through the Technology Commercialization Initiative are due August 3, 2012 with final proposal submissions due September 7, 2012.
Through a competitive selection process, funding will be awarded for individual projects ranging up to $100,000 each that address key engineering design challenges, show a high degree of innovation and most importantly, identify a clear path to commercialization with the potential to significantly impact digital and/or robotics-related companies in Pennsylvania.
Required project completion is 12 months commencing from date of contract.
“The Technology Commercialization Initiative aims to establish and grow a leading industry presence in Pennsylvania focused on market segments in digital multimedia, digital networking, and robotic applications,” said Chuck Brandt, Ph.D., vice president, Technology Programs for Innovation Works.
“We are driving rapid and continuing progress in technology development and commercialization in these areas. Our project funding helps to identify technology challenges within these market segments and create prototype solutions that reach beyond the current generation of available products and services,” continued Dr. Brandt.
The full Request for Proposals can be downloaded from the homepage of Innovation Works website at: www.innovationworks.org. Visitors will be to be redirected to http://www.techcollaborative.org/default.aspx?id=download_rfp.
Commercial submissions will only be accepted from PA firms that have either: a) not previously received Technology Commercialization Initiative (TCI) funding from predecessor organization The Technology Collaborative, or b) received less than $250k of total funding, as prime- and/or subcontractor, from prior TTC TCI solicitations.
Potential applicants should check the Innovation Works website periodically for date(s) for webinars and/or location(s) of proposal workshops to take place throughout the state. These briefings will provide a detailed overview of the submission and evaluation process, as well as a forum for more information. Workshop attendance is not mandatory for submitting a proposal.
Those seeking funding can find more examples of funded projects and information on the website, or contact Chuck Brandt, Ph.D., VP Technology Programs, email@example.com.
Innovation Works assumed responsibility for the Technology Commercialization Initiative (TCI) when it assumed the primary programs of The Technology Collaborative in May.
The Technology Collaborative is ending operations, but funding for the TCI continues at Innovation Works as well as other support for the state’s digital and robotics industry cluster.
Tuesday, June 19th, 2012
With gas and energy prices hitting highs in the past few months, the self-employed are cutting back their business activity, according to the National Association for the Self-Employed (NASE). Results from a survey of more than 500 NASE members reveal that fifty-three percent said the rise in prices has moderately or significantly hurt their business.
“High gas prices are still hurting the self-employed, many of whom depend on their vehicles to conduct the day-to-day work of their businesses,” said NASE President Kristie L. Arslan. “What the self-employed and micro-businesses (10 or fewer employees) truly need is a retroactive update to the Internal Revenue Service’s 2012 mileage deduction. This action would better reflect the high cost of gasoline in the beginning of 2012.”
Three-quarters of the self-employed use their vehicle both for business and personal use. In fact, almost half of respondents said they spent over $250 on gasoline for their vehicles in a month, the largest answer possible to choose in the survey. Nearly 70% said that the cost of gas changes their driving behavior.
“When business and personal finances are so closely tied, as they often are for the self-employed and micro-businesses, any rise in cost can be significantly damaging to the health of a company,” Arslan said. “Almost three-quarters of our business owners have seen energy costs for their homes rise, as well, which impacts their home offices.”
The following responses are from open-ended questions in the member survey that allowed respondents to voice their concerns:
- “The prices mean I have less to spend on other items for business.”
- “I opened another office in a town 40 minutes north to serve my patients in that area who were restricted in their travel by high gas costs.”
- “I increased prices, reduced my workforce, and implemented new policies on energy use.”
- “I reduced events attended for business training, professional associations, and contact meetings.”
- “I try to consolidate business travel to save gas. Unfortunately, I can’t pass on the price of gas to my clients.”
See the full survey in the NASE Survey Results section.
Wednesday, June 13th, 2012
Symantec Corp. (NASDAQ: SYMC) today announced the findings of a landmark study it commissioned from Forrester Consulting, which reveals that the leaders of small businesses launched during the Great Recession are dramatically different than those who launched their company prior to 2008.
The recent recession put millions of people out of work or threatened their employment. It also ravaged the home equity and retirement accounts of countless recently retired professionals, leaving them to wonder whether they walked out of their previous employer through a one-way door to financial ruin.
These unprecedented economic shockwaves spawned a new breed of entrepreneur: the accidental entrepreneur – defined as a company founder who started his or her small businesses out of pure necessity rather than a lifelong dream of “being their own boss.”
Agile, educated, tech-savvy and battle-tested
These accidental entrepreneurs are agile, highly educated, tech-savvy and battle-tested business professionals and the companies they founded and will found are born to grow.
While the recent recession has extinguished the torch of an unprecedented number of small businesses, the number of new companies born during the last three and a half years is equally unmatched.
In the U.S. alone, there were 60,000 more businesses started per month in 2009 than in 2007, according to the Kaufmann Foundation’s Index of Entrepreneurial Activity.
The Forrester Consulting research indicates that the companies founded as the world economy struggled are poised for explosive growth, particularly companies with 10-49 employees, and that they aggressively leverage technology such as cloud computing to fast-track their success.
Key Findings (10-49 employees)
- Profits not passion drive small businesses started post 2008. Fifty-four percent of small businesses founded in the dark days of the recession consider their company a growth business (having an exit strategy) rather than lifestyle business which is 15 percent higher than pre-recession companies. More than one-third of the founders of post-recession companies came from a position with a large (500+ employee) company.
- These skilled professionals are used to making a good living and need to re-invent themselves to maintain their standard of living — 35 percent left their large employers due to the recession, while another 8 percent came from other accidental entrepreneur backgrounds, such as the newly “unretired” or returning military.
- Accidental entrepreneurs are bullish about growth. Of the small businesses founded post 2008, 46 percent expect to double their number of employees in the next two years and 75 percent expect revenue to grow more than 10 percent. Fewer small businesses founded prior to 2008 are as optimistic, with only 12 percent expecting to double employees and 39 percent expecting to grow revenues by more than 10 percent.
- Recession-born small businesses take dramatic and immediate advantage of the cloud. Twenty-one percent of accidental entrepreneurs have zero servers versus 5 percent of those founded before 2008. These small businesses trust more applications to the cloud, with 51 percent deploying cloud software and 26 percent having implemented cloud security, compared to just 39 percent and 16 percent of pre-2008 small businesses, respectively. Interestingly, the research found that all small businesses are aggressively adopting cloud storage and backup.
- Accidental entrepreneurs are better prepared to scale security. Accidental entrepreneurs are also 27 percent more confident that their current security solution will scale with their company’s growth over the next two years.
- More self-sufficient in making software decisions. Whether financial/accounting/ERP, collaboration or security software, accidental entrepreneurs base their decision on what software the founder used in their previous job or that they used as a consumer.
- They also strongly prefer known brands. On the other hand, the majority of pre-recession small businesses base their software decision on the recommendation of a value-added reseller (VAR).
- For collaboration software, the difference is especially striking, with 50 percent of pre-recession small businesses acting on the recommendation of a VAR, while 36 percent of post-recession small businesses chose software that the founder used in his former job or as a consumer.
Monday, June 4th, 2012
Atlanta startups are optimistic about their local economy.
Research released today by Dell and Intel reveals a bright local outlook for Atlanta and Miami startups and small businesses despite the tough broader economic environment.
The optimistic picture shows a favorable view of the local economy and local organizations supporting businesses as well as healthy expectations for growth.
“We must look past doom-and-gloom headlines and remain focused on strengthening local entrepreneurial ecosystems to support startups and small businesses.”
“The confidence of entrepreneurs gives us good reason for optimism, even while everyone worries about the national economy,” said Jonathan Ortmans, senior fellow at Kauffman Foundation and president of Global Entrepreneurship Week.
“We must look past doom-and-gloom headlines and remain focused on strengthening local entrepreneurial ecosystems to support startups and small businesses.”
The release of the Dell-Intel survey findings kicks off a nine-city Small Business Think Tank tour aimed at understanding the state of small business at the local level.
Through listening and dialogue, the research and tour will examine the prospects, perceptions and priorities of startup and small business owners in Atlanta, Miami, Boston, Chicago, Los Angeles, Philadelphia, San Francisco, Seattle and Austin over the coming months and help inform recommendations for the tools and resources they need to grow both at home, nationally and globally.
The events are hosted in collaboration with local chambers of commerce and national partners including Global Entrepreneurship Week and Startup America Partnership.
At the conclusion of the tour, Dell and Intel will publish a comprehensive report on the state of U.S. small business based on the quantitative and qualitative data gathered from the nine cities.
MIAMI AND ATLANTA SURVEY HIGHLIGHTS
- Growth remains the focus in the face of the tough economy. Nearly all startups and small businesses plan to grow (97 percent, Miami; 91 percent, Atlanta) and say growth is important (96 percent, Miami; 91 percent, Atlanta). Despite reporting challenges of growing a small business in today’s economic environment and worries about sustaining the success of their businesses, more than half plan to grow in the near-term (53 percent, Miami; 52 percent, Atlanta).
- Views of the outlook and support for small business generate greater optimism in the local economy. Most respondents are optimistic about their companies’ financial situations; they expect a better year (63 percent, Miami; 60 percent, Atlanta), sales outlook (74 percent, Miami; 84 percent, Atlanta) and growth opportunities (66 percent, Miami; 67 percent, Atlanta) next year. Compared with a 14.6 percent aggregate national approval rating for Congressional job performance reported by RealClearPolitics, they rate local elected officials much higher (49 percent, Miami, 64 percent, Atlanta).
- Limited hiring shifts the focus to technology as a growth driver, but the priority placed on talent suggests hiring on the horizon. Nearly half of small businesses stayed the same size over the past three years (44 percent, Miami; 45 percent, Atlanta), most are neither hiring nor firing (73 percent, Miami; 71 percent, Atlanta), and in the face of limited hiring, more than half expect growth will come by investing in technology (50 percent, Miami; 57 percent, Atlanta).
“We know small businesses are doing more with less and employing technology to be more productive, and this enables them to grow their businesses profitably,” said Mel Parker, vice president and general manager of Consumer, Small Office and Member Loyalty at Dell.
“The growth technology fuels promises to improve future hiring, especially since technology-savvy small businesses create more jobs than their counterparts.”
Thursday, May 31st, 2012
DC is number one on the Norton list of the riskiest online U.S. cities.
For the second year in a row, the Washington DC metropolitan area ranked as the strongest local economy in the United States in POLICOM’s annual “economic strength” rankings. With an expanding federal government as its economic anchor, the metropolitan area has been virtually immune to the national recession.
The Des Moines, IA metropolitan area placed 2nd in the rankings driven by the expansion of the Finance and Insurance sector.
POLICOM annually ranks the 366 Metropolitan Statistical Areas and 576 Micropolitan Statistical Areas in the United States for “economic strength” to enable POLICOM to study the characteristics of strong and weak economies in the country.
For the economic strength rankings for all areas, go to http://www.policom.com.
Concord, the capital of New Hampshire, is top among the 576 “Micropolitan” areas. Micropolitan areas are smaller economies and do not have a city with a population greater than 50,000 people.
The Huntsville, AL MSA improved significantly, jumping from 52nd to 16th place as a result of rapid growth in the high-wage Professional and Scientific Services sector.
“The top-rated areas have had rapid, consistent growth in both size and quality for an extended period of time,” William H. Fruth, President of POLICOM. POLICOM, located in Palm City, FL, specializes in analyzing local and state economies.
“The rankings do not reflect the latest ‘hotspot’ or boom town, but the areas which have the best economic foundation,” Fruth continued.
The study measures 23 different economic factors over a 20-year period to create the rankings. The formulas determine how an economy has behaved over an extended period of time. Data stretching from 1991 to 2010 was used for this study.
POLICOM has created this study each year since 1997.
The following are the 10 strongest Metropolitan and Micropolitan areas.
2012 Ten Strongest Metropolitan Areas
1 Washington-Arlington-Alexandria, DC-VA
2 Des Moines-West Des Moines, IA
3 Seattle-Tacoma-Bellevue, WA
4 Nashville-Davidson-Murfreesboro-Franklin, TN
5 Austin-Round Rock-San Marcos, TX
6 Salt Lake City, UT
7 Madison, WI
8 Kansas City, MO-KS
9 Sioux Falls, SD
10 San Antonio-New Braunfels, TX
2012 Ten Strongest Micropolitan Areas
1 Concord, NH
2 Helena, MT
3 Lexington Park, MD
4 Gillette, WY
5 Sheridan, WY
6 Durango, CO
7 Watertown-Fort Drum, NY
8 Lebanon, NH-VT
9 Bozeman, MT
10 Grand Island, NE
Friday, May 18th, 2012
Confidence about the US economy’s 12-month outlook rose sharply this past quarter among executives surveyed for PwC US’s Private Company Trendsetter Barometer.
Sixty percent of Trendsetter executives voiced optimism (up 21 points from the prior quarter), with just 8% expressing pessimism; the remaining 32% were uncertain.
For a while there earlier this year we saw one or two these reports about the improving economy each week here at the TechJournal.
But we also saw hard data that suggested firms were going to have to hire more if they want to grow. Productivity gains from technology and streamlined operations have leveled and once that happens, growth requires hiring.
That is happening slower than we expected – with the world economy still in turmoil and a gridlocked US government among the headwinds. But this report shows that even globally, optimism is improving.
Optimism returns to same level it was at a year ago
Confidence about the global economy rose, with optimism being voiced by 29% of Trendsetter companies that sell abroad (up 5 points). Just 10% expressed pessimism, while the majority registered uncertainty (61%).
“Trendsetter executives’ confidence in the US economy has returned to nearly the same level it was a year ago, and pessimism levels keep dropping, indicating private companies’ belief that the economy continues to recover, if at a slow pace,” says Ken Esch, a partner with PwC’s Private Company Services practice.
“Last year, we saw confidence plummet to 27% on the heels of policymaking gridlock and the S&P’s downgrade of the US debt rating,” Esch further notes.
“While we don’t anticipate a repeat of last year, these are still volatile times, and so optimism about the US economy may continue to fluctuate. On the other hand, optimism about the world economy has seen no dramatic movement among Trendsetter executives over the last several quarters, reflecting the Eurozone’s difficulties of the past year.
“With the political uncertainty around austerity measures and the recent announcement that Spain and the UK are officially in a double-dip recession, Trendsetter optimism about the world economy might stay at its current level for the time being.”
Private Companies Project Strong Growth, Set Higher Revenue Targets
Overall, 90% of private-company executives expect positive revenue growth for the next 12 months (up from 78% last quarter).
They forecast an average revenue growth rate of 9.5%, up from 8.5% the prior quarter. Much of this increase comes from domestic-only companies, which forecast a growth rate of 9.9% (up from 7.5%). Meanwhile companies selling abroad forecast a growth rate of 9.0% (down from 9.6%).
Despite their uncertainty about the world economy, Trendsetter companies selling abroad expect that 21% of their total revenue over the next year will come from outside the United States.
Sales abroad improved in the first quarter of 2012, with 43% of international Trendsetter companies reporting higher sales (up 6 points) and only 4% reporting lower sales.
“Many of the Trendsetter companies that sell abroad are operating in a two-speed economy because they have a presence in both Western Europe and various emerging markets,” says Esch. “So while we see the survey results clearly reflecting companies’ ongoing concern about the Eurozone, where economic growth remains sluggish for the most part, we’re also seeing those same businesses maintain their focus on fast-growth markets outside Europe. Those markets have become integral to the long-term growth strategy of many US private companies.”
Hiring Holds Steady
To keep pace with increased revenue projections, 59% of private companies plan to add to their workforce over the next year (up five points). Only 3% plan to reduce the number of people they employ, and 38% expect headcount to stay about the same. Overall, a 1.8% increase is projected for private companies’ composite workforce.
“Though private companies continue to hire, it’s mostly at the margins, and we do not expect significant additions to headcount,” says Esch.
“One reason we’re seeing only small increases to the workforce is that companies are having difficulty finding people with the right skills for the jobs available. We’ve seen this in the Trendsetter findings for some time now, with roughly one-quarter of Trendsetter companies consistently citing lack of qualified workers as a barrier to growth.”
Thursday, May 17th, 2012
Amid difficult economic conditions, private equity firms have become increasingly focused on improving strategy and operations at their portfolio companies as a means of creating value, according to the McGladrey LLP, fourth annual survey of private equity (PE) executives.
In fact, nearly two-thirds (65 percent) of firms reported that they have generally increased employment at their portfolio companies, contradicting recent, widespread sentiment that PE firms are ‘job killers.’
“Our survey findings and other supporting data not only contradict growing misperceptions about the private equity industry, they also indicate that firms are playing a key role in helping the middle market sustain itself and grow in an economic climate that remains challenging and uncertain,” said Don Lipari, national executive director – private equity services for McGladrey and office managing partner of the firm’s New York office. ”
Increasing headcounts as part of growth
“Not only are these firms increasingly focused on growing their portfolio companies as a primary means of generating value, they are increasing headcounts on the ground level as part of that process,” added Milton Marcotte, national practice leader – transaction advisory services for McGladrey.
Here at the TechJournal we have consistently noted that startups and small businesses becoming bigger business are where the real job growth evolves in the American economy. Economic development officials often spend a great deal of time, energy and taxpayer money chasing large manufacturing operations and major company expansions.
Even now, job seekers should check out the the portfolio companies of private equity and venture firms nationally, because many are hiring.
The 2012 McGladrey survey, conducted in partnership with independent private equity and venture capital research firm PitchBook, represents responses from more than 100 PE firms across the country, and provides important insights on current trends in strategy, employment and other key areas.
Additional findings from the 2012 survey include:
- Firms are taking a more active role in portfolio company management. Respondents reported an increase in their focus on management, operations and strategy to drive value creation.
- Onshoring is becoming more prevalent as Chinese labor and freight costs rise.
- The impact of tax policy changes on investment and operational strategies is uncertain. While changes to the carried interest tax rate is more likely to be felt at the fund-level, nearly 40 percent of respondents are currently unsure of whether an increased rate will have a significant impact on investments and operations.
- Management capabilities are critical to success. More than 96 percent of respondents identify management capabilities as the top factor driving successful investments.
- IT deficiencies at portfolio companies continue to be an issue, as firms look to generate operating metrics on a more real-time basis to drive operational improvement and monitor progress.
View the results of the 2012 Private Equity Survey.
Wednesday, May 16th, 2012
Revving the U.S. job engine requires more fuel from small businesses. This is according to a report released today by TD Economics, an affiliate of TD Bank.
Two and a half years following the end of Great Recession, hiring rates are still very low, but the number of people separating from their jobs – quitting or being fired – is even lower.
This has the guise of an improving job market, as the number of people starting new jobs outpaces the number of people leaving old ones. However, it is really a story of cautious behavior and lack of opportunity among existing employees.
“When thinking about the job market, we have a tendency to just look at the change of employment, but this is only the tip of the iceberg,” says TD’s Vice President and Deputy Chief Economist Beata Caranci, who authored the report. “We learn much more by looking at the flow of people leaving and starting new jobs. Small businesses are the main driver of these flows.”
People staying put in their jobs
“Small businesses exhibit job churn at three times the rate of larger businesses. This reflects the greater push and pull of failure and success at the small business level. Job growth is driven disproportionately by the success stories,” says Caranci.
“Unfortunately, the Great Recession and subsequent slow recovery has curtailed the number of new start-up firms, hit the survivorship and stunted hiring intentions of those success stories. This in turn has impacted job churn in the overall labor market.”
Prior to 2006, an average of 5.3 million new hires occurred each month. Conversely, people leaving their jobs (referred to as total separations) averaged over 5.1 million. Since there were more new hires than separations, total employment grew by an average of 172,000 per month.
“At the height of U.S. job losses in 2009, the level of gross hiring fell sharply to just 3.8 million hires per month. Although separations also fell – to 4.3 million per month – it exceeded hiring, causing total employment to contract by a whopping 421,000 jobs a month,” says Caranci.
“In the first three months of 2012, the gross hiring rate has improved from its recessionary bottom, but at 4.3 million hires per month, it’s still well below the pre-recession level.”
Low churn worrisome for younger workers
TD Economics says low job churn has had implications for younger Americans, who tend to see the greatest wage gains via churn and are more likely to be employed at younger (and smaller) firms.
“The sharp decline in labor mobility these past few years is particularly worrisome for younger workers, as it could mean lower life-time earnings for those currently trying to enter the job market,” says Caranci. “Hiring rates – particularly for younger workers — will not return to pre-recession levels until conditions for small businesses do. Unfortunately, this is going to be a slow grind upwards.”
However, according to TD Economics, there are positive signs that conditions are improving for small businesses. Commercial and industrial lending, which fell by 26% between October 2008 and October 2010, is up 13.5% in early April from year ago levels.
There is also expected improvement in personal consumption expenditures over the next year, and fewer small business owners are reporting that a lack of sales is their biggest challenge.
TD Economics also predicts that although real estate prices will be slow to recover, a bottom will most likely be reached this year. With time, this will accelerate the repair of household balance sheets, boost consumer and business confidence, and open up another credit channel for small businesses looking to use real estate as collateral.
“Hiring rates will not return to normal without the express participation of small businesses and the churn they create,” says Caranci. “It will take more time, but the prospects for economic growth and a stronger labor market will rise significantly as conditions continue to improve for small businesses.”
TD Economics provides analysis of global economic performance and forecasting, and is an affiliate of TD Bank, America’s Most Convenient Bank.
The complete findings of the TD Economics report are available online at http://www.td.com/document/PDF/economics/special/jm0510_small_business.pdf.