The Conference Board reported this week that the Leading Economic Index (LEI) for the U.S. increased in November for the fifth straight month, and for the 19th month out of the last 20 months going back to April 2009 as the recession was coming to an end and the LEI turned up (see chart by Mark Perry below).
The latest from Robert Barr in this week’s SAF Trend Tracker:
The nature of this recession – caused by a financial panic – means that the recovery is not playing by the customary script this time. Housing, for example, usually leads the economy out of a recession, as low interest rates spur new residential construction and home sales. But the number of troubled properties on the market remains high, even though much of the excess supply is concentrated in just a few markets. In terms of being a source of strong economic growth, housing will likely sit on the sidelines for a few more years.
The good news is that the economy is growing, albeit at a slower pace than we’d hope – and too slow a rate to bring down the unemployment rate, for now. In fact, the unemployment rate climbed in November to 9.8%, up from 9.6% in each of the three previous months. But the labor markets are always a lagging indicator of economic recovery.
Other important figures reflecting conditions more “upstream” in generating economic growth tell a different and much more positive story. For instance, corporate profits are up 28% over year-ago levels (fueling the stock market improvement). And business investment in software and equipment is booming, up 19% in the past year. That’s the strongest four quarters of growth in that segment in 26 years – even surpassing the build-up to Y2K. These developments do follow the usual story for economic recovery, as business owners, prodded by lower interest rates, add to business investment. As entrepreneurial activity and investment grow, corporate America lays the groundwork for stronger economic growth in the coming quarters.
Mix the strong activity here with the relatively strong kick-off to the holiday shopping season, and you get a strong sense that the recovery is in fact taking root – and that fears of a “double-dip” recession are overblown. And not only are the early reports from the nation’s large retailers positive, they also indicate that consumers are spending money on themselves, too – in contrast to the last few holiday seasons, when spending was more constrained.
Finally, the tax compromise that was coming together in early December could, if enacted according to the announced framework, provide some important fuel to stronger economic growth. The extension for two years of the current set of income tax rates – rather than the increase currently slated to go into effect on New Year’s Day – not only helps the entrepreneurial segment, but it ends some uncertainty, at least for now, about tax rates. The one-year cut in the Social Security payroll tax also generates a bit more cash for households, but, more importantly for economic growth, the investment expense provisions and the lower capital gains tax, currently at 15 percent, should prove to be an important business incentive.
Robert Barr is an economist based in Virginia.
Sources: Bureau of Labor Statistics (Dec 3, 2010); Bureau of Economic Analysis (Nov 23, 2010); Moody’s Analytics.
The OFA Short Course, Columbus Ohio
Saturday, July 10th8 AM – 12 PM
Crop Management Workshop: Keeping You & Your Customers Happy (4 hours)
Charles Hall, Texas A&M University
Michelle Jones, The Ohio State University, OARDC
Claudio Pasian, The Ohio State University
George Staby, Perishables Research Organization, Chain of Life Network
Terri Starman, Texas A & M University
Don’t keep throwing your money away. Plant losses (or shrinkage) during production, shipping and retailing negatively impact your bottom line. In this session, you will learn how to manage plant quality throughout the production and marketing chain so that you can realize maximum salability and profit from your crops. This session will look at how fertility, temperature, light, container design, growing media, wetting agents, hydrogels, packaging, transportation, and ethylene can affect the shelf life of bedding and potted plants. You will learn how the application of anti-ethylene compounds and abscisic acid based plant growth regulators can be used to enhance plant stress tolerance and increase plant survivability during shipping. If you produce or sell plants, you will not want to miss this valuable workshop.
The pre-registration price for OFA and ANLA members is $95; the non-member price is $120.
Details can be found on page 64 of the educational programs brochure at http://www.ofa.org/sessions.aspx
Registrations begins May 11, 2010
To register online go towww.ofa.org/reg
Here is the official news release that went out this week regarding this year’s Seeley Conference:
The 25th annual Seeley conference will be held June 26-29, 2010 in Ithaca, NY. The theme this year will be: Floriculture’s Environmental Footprint: An Inconvenient Truth or Consumer Opportunity?
For several years, we’ve heard about global warming and climate change as issues we need to address. And the debate has had arguments spanning from compelling science to just a natural cycling of weather patterns. Now, legislators the world over have begun to amend the dialog to one of measuring the carbon footprint. Scientists have added water to the equation and now are beginning to speak of measuring the entire environmental footprint.
One can hardly open the newspaper, watch the news, or go anywhere without running into some mention of what has become the most notable environmental issue of the decade, said Dr. Charlie Hall, holder of the Ellison Chair in International Floriculture at Texas A&M; University, who is coordinating this year’s Seeley Conference.
For our industry, the issues are more compelling. We think of ourselves as being the original green industry, but we often fail to promote that, perhaps, partly out of fear. Do we know what our environmental footprint really is? Are we as green as we think? Do we have an opportunity for better promotion, or do we need to get our house in order first?
Of course, the real issues revolve around what it means for our individual businesses — our bottom lines. Will the outcomes of the legislative debate impact our businesses? Are there modifications we need to make to stay in business once the debate ends and the laws are enacted? Will our businesses be able to remain financially solvent or will regulations force us out of business?
Hall adds that business owners should not think of the climate change debate as merely an environmental issue. Instead, they should view it as a market transition and as in any market transition; there will be winners and losers. With the water and carbon policy debates occurring locally and nationally this year, this year’s conference is all the more critical to attend, Hall notes.
As always, the think-tank atmosphere of the Seeley Conference will allow for plenty of interaction with fellow industry leaders regarding these timely issues. For more information regarding the Seeley Conference and this year’s program, the conference website is www.hort.cornell.edu/seeleyconference, or Facebook users can refer to the Seeley Conference fan page.