If you’ve been to a lunch meeting, a cocktail reception or most any gathering of business people in Los Angeles in the last few weeks, you’ve probably talked about the economy.
Suddenly, it seems, everybody’s asking: Is the economy really recovering? Do you see a turnaround in your business?
The picture is jumbled partly because economic forecasts now are highly politicized. Liberal organizations and individuals are trumpeting a Great Recovery, while conservative ones are dismissing any alleged comeback as too meek or as a temporary bounce. Those divergent stances are understandable since the economy may play a big role in the critical elections this fall.
But if you put aside the politics of it and just focus on the numbers, you have to acknowledge this: There’s some good stuff stirring around out there.
Just look at the latest national numbers. The March employment report was bracing. Chain store sales for the year ending in March were up an eye-popping 10 percent. Consumer confidence is rising. What’s more, commodity prices are booming on the prospect of increased demand, corporate profits are strengthening, and the major stock indexes are up 40 percent or 50 percent from a year ago.
Local numbers are improving, too. In February, we had 76,000 more people employed in Los Angeles than the prior month. Container traffic at the ports in February was way up from a year earlier. Hotel occupancy in January was up 10 percent from the previous year. Prices of local stocks, as measured by our LABJ Index, are up more than 50 percent in the last year.
Not all is rosy, of course. Commercial real estate continues to be a nail-biter. Unemployment remains frightfully high. And small businesses are suffering. In fact, the National Federation of Independent Business last week reported that only 18 percent of entrepreneurs in March saw the economy improving enough to help them, down from 26 percent in the fall.
But recoveries always start out unevenly. Besides, unemployment is a lagging indicator, since most businesses won’t add to their payrolls until they’re convinced they can’t make it without another employee. Likewise, unfortunately, many (certainly not all) small businesses lag the overall economy; they won’t see much improvement until the recovery is well under way.
I’m no economist, but if you add all this up, it takes no genius to conclude that it appears that a solid and broad recovery is taking root. And conservatives who trash it are in the stupid position of rallying against an economic rally. It’s like whining that the rescue party that’s finally come for us may not be dressed properly.
But liberals who trumpet the recovery as some kind of political vindication are whistling past the graveyard. After all, their financial mismanagement has created almost unimaginable public-sector budget problems – in Washington, Sacramento and Los Angeles. Those may well lead to much higher taxes, including higher electricity rates in Los Angeles, since a part of your electricity bill is a tax bill in thin disguise.
And taxes, if hiked enough, will kill or throttle back any economic recovery. That makes this budding recovery unlike the early ’80s, when lowered tax rates cleared the way for businesses to invest and take risks with confidence.
And those taxes, if hiked high enough, will quickly transform what’s shaping up to be a V-shaped recovery into a W-shaped one – one that includes another recession.
Charles Crumpley is editor of the Business Journal. He can be reached at email@example.com