Earlier today I attended the Indiana University 2012 Business Outlook Panel in its visit to Richmond. It's a group that "has presented national, state, and local economic forecasts for the coming year to business, political, and community leaders of Indiana" for the last 38 years. I attended the same gathering back in 2005 and I have to say that today's commentary wasn't much different from what it was six years ago: "things are not great with the economy, but there are reasons to be cautiously optimistic."
As I noted in my reflections from the 2005 event, there were a couple of troubling ideas that permeated the remarks, especially from the panelists looking at global and national trends.
The main one that I continue to struggle with is the idea that we just have to wait for the global economy to improve and drive things to get better at the national, state and local level. In defending the power of globalism, one of the panelists even outright made fun of the idea of building a regionally self-reliant economy.
A more regional approach to economic development - instead of depending on the importation of resources from around the world - is exactly the approach that many others (myself included) are saying is key for communities like Richmond to surviving the increasingly intense effects of rising fuel prices, the falling value of the dollar and the destruction of the natural environment. While I appreciate that there's hope in what a thriving global economy might mean for midwestern cities, I'm not sure it's reasonable to ask the people without jobs or credit or homes or disposable income to keep waiting it out, just another year or two.
Despite the inclusion of this troubling premise, the event was still interesting and perspective-bringing; some other tidbits shared by the panel:
- Political dysfunction at the national level is clearly eroding confidence in the ability of policy-makers (Congress and the President) to have any real effect on the economy
- To make sure we can survive through any kind of economic recovery, we have to address the Eurozone economic situation, stop implementing short-term, ineffective fixes domestically and start solving problems for the long term, open and evolve our financial system ("Federal reserve monetary policy currently penalizes people who save instead of rewarding them"), and pay attention to China's emerging consumer culture.
- Despite the down economy, corporate earnings are up 11% and are expected to improve
- We have to do better at answering the question "what should investors do with their money?" The market is too volatile, savings accounts don't offer a return, and if we don't have some good options, people will seek dangerous ways to get a higher rate of return (e.g. lending money to home-buyers who can't actually afford it).
- Indiana has been hit harder than most states, losing a quarter of a million jobs from 2007 to 2009. Those jobs mostly aren't coming back, in part because they've been lost from organizations that are more efficient and don't need them any more.
- Private education and healthcare services are the two industries that are doing well in Indiana, with 36,000 jobs added in the last year. The government sector has recently done well too as the result of stimulus fund application (there were 450,000 government jobs in Indiana as of May 2010) but that's expected to level off or decline as those funds dry up.
- Housing sales in Indiana are down 3% and the average price of homes for sale are up 1% - not a good economic trend, and new housing construction has slowed significantly.
I also learned a new economic term that is very timely for my own hiring attempts at Summersault. One of the event attendees asked the panel how they reconcile the issue of companies and organizations investing in lots of infrastructure and equipment to expand but then not being able to find qualified workers to fill those jobs. The term for this is "structural unemployment" where there's a mismatch between demand in the labor market and the skills and locations of the workers seeking employment. Richmond is experiencing a form of this now, where we (including my company) have positions that are open but our workforce doesn't always have the training or skills to fill them. The panel didn't offer any particular solution to this phenomenon, but the implication was that it is among our most serious challenges to solve.
Thanks to Indiana University East for sponsoring this event and to Reid Hospital for hosting it. I hope it generates some useful conversation.