CHICAGO -- A slow-moving economy can actually work in favor of a business climate on the mend, at least if 2015 and the start of 2016 are any indication, said the economist who opened the general session at NACS’ annual State of the Industry (SOI) conference, with a little help from the sloths in "Zootopia."
Pinpointing areas such as unemployment, inflation and other key economic indicators, David Nelson, a professor of economics at Western Washington University, told about 600 attendees at the SOI general session that the current economic recovery has lasted seven years—longer than other comparable recoveries.
That may not be a bad thing, Nelson said, because historic trends don’t allude to any future downturn despite such a slow comeback.
“Just because the recovery is taking a long time is not an indicator,” he said. “You’ve got to instead look at other indicators of [a pending] recession.”
He cited several trends that bode well for the economy:
- Different segments of the economy are exhibiting a slow recovery. Manufacturing, construction and the government sector are all showing strong, consistent growth, he said.
- Gross domestic product (GDP) growth is projected to be about 2% for the next couple of years, a trend he describes as slow but steady.
- Employment is up: The economy has seen 200,000 jobs a month in recent months, a strong figure even factoring in lower labor participation rates.
- New housing rates are up, which is good for c-stores because construction workers are a strong customer base for the channel.
- Inflation rates remain low, a product of lower commodity prices and a strong dollar.
While Nelson said higher labor costs due to increasing minimum wage laws and other factors present a challenge, retailers have many other benefits in an improving economy, including increased consumer confidence and spending. He also mentioned opportunities with worker tax benefits, favorable depreciation options and improved technologies coming within reach.
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