Many of us look at data, especially key indicators, on a regular basis to help form our views on business issues. When there are conflicting views, or even differences in data, it’s often important to consider the source of the information. Maybe there’s a source that sways us more than others, perhaps because it has been right more often than not. Or maybe we’re swayed by sources respected within a particular field.
When it comes to conflicting views of what is going on in the business that influences world trade, and how 2010 is shaping up, I find myself leaning toward the latter as my greatest influence.
And that’s especially true this year, because conflicting news on the trade front has me truly scratching my head. With double-digit increases in trade year-to-date, why do many prognosticators say growth for the year will come in only at 8.5 or 9 percent? When I see containerized exports at Los Angeles-Long Beach, the nation’s largest port complex, growing 17 percent and imports increasing 16 percent in the first half of the year, and see the overall value of U.S. imports up 25.3 percent and exports up 22.9 percent, it’s mystifying.
I also consider the conflicting reports out of Washington, where the administration tries to convince us the stimulus plan worked, that it put many people to work in the private sector, even as I see 9.5 percent unemployment and second quarter GDP growth of 2.4 percent, a decline from the first quarter. Without the stimulus, we’re told, it would have been much worse.
But a quick look at what China’s stimulus plan accomplished — a 10.5 percent increase in GDP and jobs that truly put people to work — makes you wonder what could have been. U.S. business is nervous, according to numerous reports, and companies will not invest in what they consider a bad business climate. That means unemployment will stay where it is for some time, or worsen, and trade will suffer.
And then I saw an interview on CNBC with Steve Wynn, the visionary real estate magnate who revolutionized Las Vegas starting 30 years ago. In addition to his Las Vegas properties, Wynn now has significant — and increasing — investments in Macau, the second special administrative region of China, along with Hong Kong.
As a businessman, he explains, he has no idea what is happening in the U.S., with its new regulations, new taxes, uncertainty about the economy, massive deficits, massive spending and massive debt. By comparison, China is a virtual sea of tranquility, he says. Although that country certainly has its problems, it also carries out its strategic plans with little surprise to anyone.
Business, Wynn says, needs a stable, certain environment in which to operate and grow — and hire. China today is a more stable, predictable environment than the U.S., he argues, adding the current U.S. government is anti-business, leaving us to hold back from any further investing and hiring.
“Look at health care,” Wynn said. “Is there anyone who really believes that when we add 31 million people to the health care roles the costs aren’t going to go up? Why didn’t they address two of the largest cost factors in health care — tort reform and unnecessary tests — just to ensure that they aren’t sued for not doing them? The state of Texas enacted a cap on malpractice payments, and within months, the malpractice insurance rates went down 47 percent.”
Wynn spent the better part of eight minutes venting his frustration, ending with this: “The American people are nervous and concerned. Business is significantly concerned because we have no idea what is next.”
Why do I think this is important? Because Steve Wynn is a smart businessman, fully understanding market segmentation and, more importantly, the positive and negative impact the government can have on business. When he goes on that kind of tirade, those who don’t listen carefully aren’t that interested in what is happening to business and its reluctance to become more engaged and to put more people to work. You may not agree with everything — or anything — he says, but I believe he represents a huge segment of business decision-makers.
And maybe that first-half spike was just that. I hope not.
Gary Ferrulli is president of Global Logistics Consulting in Chandler, Ariz. Contact him at email@example.com.