Not making money at your Utah business? Elliot Eisenberg knows why: You’re incompetent.
In a humor-laced speech recently in Ogden, the chief economist for economic consulting firm GraphsandLaughs LLC said the Utah economy is “about as good as they get” and is ripe for companies to do well.
Not making money at your Utah business? Elliot Eisenberg knows why: You’re incompetent.
In a humor-laced speech recently in Ogden, the chief economist for economic consulting firm GraphsandLaughs LLC said the Utah economy is “about as good as they get” and is ripe for companies to do well.
“I’ll joke and say if you aren’t making good money in your business in this state right now, then you’re a lost cause, because there’s nothing anyone can do to help with that,” Eisenberg said at the Bank of Utah’s sixth annual Economic Outlook Event. “The bank can’t help you. I can’t help you. You are incompetent — that’s all there is to it.”
Eisenberg, who writes a daily 70-word blog about the economy and is a syndicated columnist, later said Utah has the advantages of population growth, a good economy, low unemployment and lots of high-tech jobs.
“So, if you’re not making money in your business, change your business model, sell your business, see a psychiatrist, get drugs. There’s nothing anyone can do to help you,” he said. “Everything is going your way.”
Among Utah’s pluses are a population growth rate that, despite slowing, is still twice that of the nation; “stupendously low” unemployment and home foreclosure rates; a gross state product that is “recovering nicely”; rising personal incomes; a house price recovery everywhere but in the St. George area; and housing starts back to about the 2003 level.
“Things are so good here that even in miserable, stinking St. George, the unemployment rate is back and healthy again. And if it’s good enough for St. George, it’s certainly good enough everywhere else in the state, because they were the ones that were whipsawed most by energy and housing — far and away they were the ones whacked the hardest — and their unemployment went from a percent above the national average to now roughly in half, roughly a percent-and-a-half below the national average,” Eisenberg said.
“Their recovery has been nothing short of spectacular on the employment side. It’s been good everywhere else, but theirs has been spectacular, and it’s indicative of the overall health of the state.”
One trouble spot is that nonfarm payroll growth is rising at about 5 percent but the labor force is growing at only about half that rate.
“What you’ve got now is, you’re running out of workers. This is becoming a big problem. Unemployment rates are dropping precipitously of late because you’re not getting enough workers entering the labor force,” he said.
“There’s nothing you can do about this. This is a good problem to have. It’s because you’re such a desirable place to live. You’re running out of workers. They’re coming in here, they’re moving here, but just not fast enough, and the population is growing but not fast enough for the workforce needs that employers have.”
Eisenberg commended audience members for being “brilliant enough to have the foresight to be born here in Utah” and attributed the economic success in part to the state’s long-range planning. He also had a tongue-in-cheek suggestion for addressing the workforce shortage.
“I go to places like Detroit and they ask me how to improve themselves, and I say, ‘Get a U-Haul and move away to Utah.’ You’re laughing because you’ve been here already,” he said.
“What you should do is drag your friends to move here. Buy your unemployed cousins one-way tickets to Salt Lake City, OK? That’s what you should do. If you love your family, that’s what you’ll do for them, all right?”
Eisenberg also suggested that companies maintain strong balance sheets because Utah’s great economic times will not last.
“Everything stops at some point, right? It doesn’t go to hell but just weakens a little bit, so be ready for that down the road, whenever it happens. But [right now] you’re doing very, very well, thank you.”
The state is “blessed” with large families and Utahns like to stay in the state. Plus, the state is “large enough for all the jobs that people want to get now” and is enjoying “this lovely, virtuous cycle going on,” he said.
“It will not go on forever. Things always stop. This is a good story. Enjoy the moment. Save some money. Put some money aside and take some risk. Take a little bit of risk. … You can withstand it because your economy is good enough.”
As for the U.S. economy, Eisenberg said talk of a recession “is kind of overrated. It’s not likely to happen. … We’re not likely to, but we’re also not likely to go to hell in a handbasket.”
He called the economy “OK,” “not great” and “good enough.”
On the plus side, households have more disposable income; borrowing is increasing; consumer confidence is “fine”; and discretionary spending on trips, restaurants and hotels is on the upswing. Companies are spending more on corporate travel and auto sales are “fabulous,” he said.
“We have more wealth, we have more cash flow, we have people borrowing more money. This is setting the stage for a pretty decent economy,” he said.
“So the household sector is doing well, and that’s the lynchpin of the economy. As long as it continues to do well, as long as households feel good and spend money and earn money and have jobs, we’ll be fine.”
However, the rest of the economy is troublesome, he said. Low oil and natural gas prices have hurt the economy and corporate profits are “not doing so well.”
A strong dollar has hurt exports because people are buying imports rather than domestic products. “So the strong dollar and weak energy prices have hammered corporate profits, putting the kibosh on corporate spending. That’s what’s going on,” Eisenberg said.
While manufacturing “is having a very mild recession,” that is a relatively small portion of the U.S. workforce. The service sector — 84 percent of the economy — is doing well.
“We have 90 percent of the economy that’s doing OK. The other 10 percent is really in the garbage can. There’s no ands, ifs or buts about it,” he said, mentioning mining, energy, manufacturing, exports and agriculture in the latter group.
“But as long as 90 percent of the economy is doing all right, we’ll be fine, thank you. It may not be super, but it’ll be OK.”
Eisenberg sees no looming recession, continuing a period of the past five years when “we haven’t had anything close to a recession.”
And all of that is despite Europe going into recessions twice, emerging markets suffering, the U.S. dollar strengthening, the oil industry collapsing, Japan being in a recession, and Russian President Vladimir Putin ordering invasions of other countries.
“I think this is pretty good. Our economy has shown tremendous resilience,” Eisenberg said. “It hasn’t been growing fast — I’ll give you that. But it’s also been growing pretty decently, given all this onslaught of crap that’s been thrown at it.”